Also how do we make it legal and legit?

If you're handed the keys to the landlord then you've legally transferred possession.

If I own an investment property that is not in my wife's name and do a quit claim deed on our home that we own together, making my wife the sole owner of our home, will that remove the chance of any legal action made by a renter etc...?

Can you potentially and legally implement RUBS (ratio utility billing system) to pass on the water expense to the tenants?

It is a one page contract that is pretty cut and dry.There's a reason the standard contracts are multiple, legal-sized pages with small type. 

So I got the package of rental forms from WI Legal something or other, and on the initial agreement (M-M) I only required tenants to pay for "water"; not fully realizing that the Milwaukee water bill also has "sewer" and "muni" charges - which are far more than "water". 

So I'm not sure if the laws are different in CO, but I know here in CA you can purchase a backcountry cabin on Forest Service Land, but it is NOT LEGAL to rent it out, nightly or otherwise.

And the last property or two they name will be a fractional TIC or DST which they will use to dump any funds left over if they can't close on one of their preferred properties or to round out the exchange.You've got plenty of time to get the 1031 guidance you need and get busy shopping if you want to do it this year. 

You can form the LLC via your state's government website and pay the applicable fees listed.When you apply for an EIN with IRS, you can to choose what type of legal structure, business, or type of organization is being established.

If I was doing it (this is NOT legal advice) I would write it in on the PA that proceeds from the sale would be split between the owner 72% and lesee 27% and that owner gives title company permission to disbursethe lesee's proceeds directly at closing.