If it is not a legal dwelling, I would live in the master bedroom, making an access to the yard/”studio” if necessary. Use the studio for your extra space or office etc. Rent out all the rooms including converting any living room to a bedroom. Put in coin operated laundry.
There is still the risk that the studio square footage is not permitted and that you get ordered to tear it down. If that is not an acceptable risk then you had better make sure about all of that.
