We've been making slow, but steady progress on our similar-sized lot and '39 home here in Portland, OR for about 5 years. We're also raising two little ones under 5 (we actually closed on the house the same day kid #1 was born!), so i know all too well about being short on time! For our first 3 years, we had a couple rent-paying housemates, which helped immensely to finance many of our projects like new, efficient windows, woodstove insert, insulation, purchasing fruiting shrubs and plants with reckless abandon, and several large tanks for holding rainwater. These days we've been seeking out a longish-term (like 2-3 months) WWOOF style helper for assistance with the summer season and a greenhouse building project, but have yet to find our perfect match.
As for urban wildlife and their challenges...slugs are our biggest challenge! As for the furry ones, I cursed the neighborhood cats utilizing my garden beds as a litter box for a couple seasons, until developing some deterrent strategies, and acknowledging the fact that we've never have any rat or mouse problems with our compost, chicken feed, or home. We have knee-high fences in our backyard food forest to keep the free-ranging chickens out and have noticed that the squirrels still get in to cause mischief, but thankfully no major damage thus far...
I did have few thoughts regarding your water (both use and recycling) plans and speculations. My (admittedly, not super exhaustive) research has suggested that the things needed to treat rainwater and make it potable are kinda expensive. Of course, this is a good investment if your town has Flint-style problems, but otherwise it would seem cost prohibitive. If you're planning to stick with a conventional flush toilet, why not consider diverting nonpotable rainwater to this use? When our rainwater/greywater guys helped install our two 330gal storage totes last year, it was suggested that it could (at least the way our home is set up) easily be plumbed (for about $800) to divert rainwater to use to fill the toilet talk. Alas, we need every drop of our collected rain water to keep the garden happy in the dry months here, and since we already had switched to a dual-flush low water use toilet that had taken a chunk out of our sewer bill, it seemed to me that the cost vs. savings would take a while to break even. And speaking of toilets and such. How about your basic Jenkins-style humanure compost? Being waterless, you wouldn't have to worry about flooding issues. We're getting pretty close to having everything set up to transition in that direction, and the biggest challenge of this method in a city setting that I've encountered is having to sacrifice precious space for compost that needs to rest for a long time. (And the fear that if something goes awry, your neighbors will likely not be happy about the smell)
Anyway, viva la urban homestead! Its one of my favorite topics of conversation
. Hopefully I can share some pics this week during nap time!