This property came with a detached garage which I plan to convert to a studio home I can also rent.

I also wouldnt worry about the electrical drain unless you are converting it to an MTR and paying electricity. 

You have the cash or you have equity that will be converted to a HELOC, a retirement account that you will pull money out of and be subject to 10% penalties plus your tax rate?

Do we need to convert the deed to an LLC first?

What methods are there to convert poh to toh?

The few STRs I've done, they had 15%+ and I decided to convert them to LTRs as its too much work.

Since those got regulated to basically behave like seller finance now, we basically have to convert it to an actual seller finance structure (which we confirmed is possible) and then buy and seller leaseback to the current occupants. 

For example convert to STR or MTR for your unit to increase cash flow?

Around the same time, BP started posting YouTube videos of the ADU Guy, Derek Sherrell (see video below) which planted the seed of converting my garage into livable space.

Most jurisdiction do not allow them to be rented short term (<30 days).I believe some jurisdictions will let you convert existing structure to the ADU, but I do not believe this is statewide and is probably a minority of jurisdictions.