I have some additional capital put away to convert the garage into an ADU to create a Mid-Term Rental but was wondering if it would be a better ROI to use that capital to purchase another investment property?

I highly suggest you use our marketplaces to find trusted, investor-friendly team members: Tax Pro finder: https://www.biggerpockets.com/business/finder/tax-and-financ...Lender finder: https://www.biggerpockets.com/business/finder/lendersProperty manager finder (if you go that route and don't self manage): https://www.biggerpockets.com/business/finder/property-manag...

By no means am I suggesting the funds should not be held correctly but there are other areas a landlord should focus their attention if they are concerned about tenant related liability. 

Thoughts and suggestions or too complex and take the hit on capital gains tax as I sell my rentals?

Normally, as @Jaycee Greene suggests, you make a management fee plus a split of cashflow with investors (oversimplified explanation).

I'm wondering the same thing! 

If you have lived in it for 2 yrs I would suggest renting it for 2 - 3 years and then selling it to avoid capital gains taxes. 

I suggest contacting an RE attorney who can assess your options.

Any suggestions on that?

I then suggest setting up a bank account where there is auto pay.