I've seen conflicting reports that says if you use any portion of the advance for COVID related expenditures it converts the entire amount into a grant, not needing to pay back anything.

@Berridge Thomas To tack onto what @Dave Foster is saying if you converted to Roth... you now have stepped up your basis and created another option where you can pull your basis tax free (because you already paid the taxes). 

I'm considering converting one of my SFH (4bd/1bth) rentals into a rent-by-the-room situation.

She stated that she converted to gas back in 1984 and filled the tanks with sand but doesn't have the documentation. 

You'll convert one months rent worth into a security deposit...This is a nutshell of the scenairos, issues, in play with rent to own to folks you don;t know. 

So rather than looking for an RE with a garage to convert, you likely would be better off looking for an RE with an existing ADU.

My fiancee and I converted our traditional (me) and roth (him) IRAs into self directed retirement funds (these were from our old W2 jobs/invested in stocks/mutual funds) We now both work for ourselves, so were able to roll over to a SOLO 401k and invest in real estate.

When I do, rather than fixing it up (built in 1948), I’d like to knockdown and rebuild, but split the folio to convert it into 2 townhouses, then sell 1 townhouse to pay off the construction costs and have a new house paid for.

If the manufactured home has been converted to real property, then there are more financing options available to you and the your end buyer.  

New laws allow you to convert duplex garage to a 1 bed ADU and the SFR garage to a 1 bed ADU, in my opinion theres no better strategy to get started in Cali.