None of this matters of the real estate is lousy, don't lose sight of this.  

Given these factors, is it worth losing some cash flow by refinancing to a conventional loan, or should I explore other options?

If it became a rental, this would go up due to losing the homestead. 

California charges a minimum tax of $800 a year per LLC, and more if you have gross receipts in excess of $250k.

Bad location= lose money and sell at a loss after a few years of frustration.  

I was worried about losing my supply.  

If you convert the garage, you lose that as an asset to the home and a future home buyer.

Unless you're direct to a seller, you'll often find yourself with tight margins which equates to losing in the end.Here in Texas, I’ve gone through hundreds of deals this year and maybe half a dozen deals were worth the investment.

The only way to lose the game is to run out of cash.

Most of these people fail, lose money, get sour on real estate, etc.