The companies that market themselves as "garage door companies" (residential) also almost always do commercial stuff as well, such as what you are looking at.

Unfortunately, the previous owners used the same lease for this garage space as they used for the residential units. 

Maybe a garage conversion is permitted maybe not.

Both houses have detached garages and I have been considering turning the garages into 1 bedroom units. 

The garage does have electric ran with a small meter base.

Don't buy a 2br/1ba without a basement and no garage on a corner lot next to the scrap yard, just because it's cheap and the seller is motivated.

We do have a tenant in ours but have closed off the pass through door.

Quote from @Yaroslav Shtogun: Hello Community,I am seeking advice on the following real estate situation:I’m in the process of purchasing a double lot property (100x100 in an RS-50 zone) that includes a 1,200 sqft wood-frame house and a 640 sqft detached garage.

I remember visiting a buddy’s place in Austin years back..he had a similar setup over his detached garage and was convinced that adding a window unit and some carpet would let him count that space towards the home’s total square footage.

Another one had a detached garage that was not on the property.