Though, this process will be the same for the other state (if you created a CA LLC you may need to register it as a foreign LLC in the state in which you are doing business/holding property).

And then as days passed he kept giving reasons that it has been continuously raining and he cant start the process yet.

I am currently in the process of laying the groundwork for an Air BNB Arbitrage Business model specifically targeting the Anchorage/Wasilla region in Alaska.

He walked me through the options I had and how he could help in that process.

Maybe I'm misunderstanding how the process works? 

I did my first 1031 exchange with First American Exchange and they helped me through the process to ensure I was following all of the exchange rules properly.

It was listed as a commercial property; a quadplex that also had a single family home on the back of the property (so two structures on one lot, zoned mixed use).

How would I go about the process of converting this detached garage/storage area into a legal and permitted ADU?

We’ve gone through the process of doing an application and submitting the required documents, and our lender is saying our combined income is too low, even with a significant down payment. 

This is why talking to the wrong people can set you back light years in real estate investing.You are rushing the process from your post.