Over the next 5 years through grad school I lived in one room and rented the other 5 out to all my friends.  

These are usually a little harder to find good quality tenants for. 3 bedrooms generally means a family with school age kids so really April/May/June are the prime rentable months for these. 

I'm very much old school when it comes to calandars and home specs in paper form.

Everything below is my un-schooled, laymen term / opinion only.

Who is to live near whom, go to school with whom?

- very generic, rates are based on location, schools, neighbor hood.

It is zoned as single family house, located a demanding area with good school district.

Most of the incorporation paper work is available online and if you are a DIY person you can take these templates, adjust some of the language and probably ask a friend in law school to take a look at a high level to make sure there are no red flags. 

I know it is imperative that I eliminate my debt unrelated to school as soon as possible but it can be difficult to determine how much money to put toward debt and savings each month as I do not want to pay debts for an entire year and not have any savings. 

Living in this Pasadena home isn't in the cards for us long-term because the home isn’t ergonomically safe for kids and we also need to move into a good school district.