My initial protege also had one (garage conversion) a few years ago that was not hands off that received a pathetic appraisal.  

How has the conversation moved along?

Trying to narrow down which strategy will best suit our goals and lifestyle is my current focus, and I am looking forward to having meaningful conversations here on these forums.

Once you do this conversion it will be difficult to change it back to a traditional long-term rental. 

I had a conversation with one of my investors yesterday and he was asking where is all the positive cash flow and the equity appreciation on our deals? 

I would also be super conversative on spending.

Always get permits for conversions and be cognizant of the experience renters will have in your home.

There’s a huge difference between winging it and setting up a system that consistently brings in genuinely motivated sellers.Get a website, focus on the 3 pillars of conversion (look it up), and crush it.

Which makes more sense in terms of fees and conversion rates?

Having a conversation up front can help you avoid lost time and money in the long run.