So once I spend the money, its going to be tied up and unavailable for the 12 years it takes to pay off the expense (assuming my 10 days a month rent stays the same and doesn't increase or decrease).Thanks in advance!

THis means as your equity increases due to appreciation, your equity value decreases. 

Is there room to raise rent or decrease some expenses?

The downside here is that this will require two loans, which will decrease my ability to purchase additional homes down the road with traditional financing.

And with a new roof and ac that decreases Capex for a while too!

Of course there will be a bigger deposit just in case of any accidents :-) and they don't even leave their enclosure lolAlso open to other suggestions for temporary residence that will accomodate our humble dog family.

These same thermostats also have an auto temperature decrease function which brings the heat down to 68 degrees if the thermostat is not touched for 3 hours.

It was likely always the intent anyways, but even if it was not the original intent and the garage use was only to be temporary, you have no way to prove it.  

Also, the re-sale price tends to contractually decrease for years after purchase, never going up.  

State the increase or decrease % and be done with it.