If my wife and I form the LLC together, will that reduce some of the risk stated above re: the participation theory?

If you claim the disabled access credit, you must reduce the amount you deduct or capitalize by the amount of the credit.

Added r-value will help reduce the strain on the hvac systems.  

My main concern is winter, I will probably look for a short term lease over winter if I can find one just to reduce the risk.Chicago does charge hotel taxes to Airbnb, and another 4% fee on top of Airbnb's fees which are published.  

After years of time spent on research, I've gotten to the point where I'm considering quitting my day job and taking up trading as a career, and I'm looking into options for reducing my taxable income.

I believe you would have to offer something extremely competitive over other landlords to still attract the best tenants, and you are not really effecting your bottom line if you are stagnating or reducing rents to offset utility cost to the tenant, you are just reducing potential risk of cost. 

Being that you are a new investor and dealing with a sight unseen auction house without an inspection or bids from a licensed contractor, it will likely reduce the likelihood that an investor will fund your project.

This requires an initial fee and a PMI for entire duration of the loan, which greatly reduces the cash flow and overall return on investment.

@Adam Reyher640 is really kind of low, but doable with a reduced LTV.  

Standardizing finishes/fixtures within this class absolutely reduces the cost of inevitable damage.