I've informed my landlord that I'd like to transfer the lease and am willing to help, he verbally agreed and mentioned he would put up + handle the listing.

My thoughts are don't lock yourself in for 24 months when the market might change in a positive way that changes your mind when it comes time to finally transfer the property.Instead, just lease it for 6-12 months at a time, and then re-evaluate as each lease comes up what is the best option for you.

Can Caltrans transfer their right of way across his property?

As a new investors, I would not recommend you take those on as projects unless you already have a very strong set of transferable skills such as construction, project management, property management and/or rehab.

And if i set up a business account for my LLC and transfer money from my personal account.

They carry a note while you fix and make payments then... when the property is ready to put on the market and once you sale then he will transfer title and you profit 

I would like to transfer ownership of current house into LLC that will be for our new rental property company. 

In one slip and small settlement, I know she got the funds, but promptly transferred to her daughter.

You really think the city isn't going to hammer you guys for this if you get the deed transferred without doing what you're supposed to?

Does the portion of the report indicate that the original Deed of Trust was transferred and is still just one deed or that a second Deed of Trust was put against the property and therefore there are two loans with a first and second position?