LAN traffic not WAN. So yes your internet is limiting but ONLY to the internet. Otherwise a workstation to a NAS/server could be up to 10x faster

You can tell by the IP address range if they’re on the same network, normally. If device behind router B can successfully ping device on router A then you’re on the same

Start from scratch and do it right the first time. Feed enters home in Basement/Utilities/Comms area. In that area is the main switch where all runs terminate to with at bare minimum 2 jacks at each location but 3 is preferred. 2 allow a router to be placed anywhere, 1 for WAN and 1 for Lan back to switch then a 3rd for an additional device at that location direct to main switch. Extra runs are easy if you’re already there pulling wires.

Plan runs for at least 2 locations on opposite sides of the rooms for best layout options. So cables don’t have to span doorways windows etc.

Then when cabling is in place a managed switch and router VLANS can be used to separate. Or a 2nd physical switch for the tenant and a VLANS capable router with a port separated to the tenant switch. Then in the tenant space they have the option to plug a router in or you can provide an AP for Wi-Fi. But that will all give you maximum stability, capacity and security.

A vlan router can be as simple as a Thin Client, miniPC or open router appliance with multi port NIC added as needed running OpnSense OpenWRT etc. Those units can be used for anywhere between $25-150 normally and software is free NIC’s are cheap

Router 2 should be a switch unless you need the extra stuff for something. At a minimum it should be in AP mode. Otherwise it’s very unlikely you’re getting “collisions”, it’s just humming along like networks do

You’re planning it incorrectly. Generally ALL jacks need a single run back to the basementUUtilities/Comms area of home where the large main switch is. The internet feed should also enter and terminate there. Then devices are connected or patched to wherever in the home you need.

Wiring 1 room to another is the wrong way to do it.

DON’T use network cable splitters, use at minimum a Gigabit switch with enough ports to do what you need, ideally with extras

Better to just run more cables properly but technically no

Use proper WAP’s designed to do the job not routers designed to do a different job. But yes you’re correct they’re working as designed you want them in AP mode. Many newer have that option but tons of older don’t.You also want to do a Wi-Fi site survey and see what channels everything is on and spread channels out.

Checkout the pinned comments for tips on planning and layout Home Networking Basics https://www.youtube.com/watch?v=fjRKID2ucPY&list=PLqkmlrpDHy5M8Kx7zDxsSAWetAcHWtWFl

Best option and highest bandwidth is gonna be run conduit and a fiber cable. Then in garage can either terminate into a switch or media converter. The add a WAP or just plug in devices

Run exterior 1 1/2" conduit with long sweep 90⁰ bends and LB into the structure. Here’s an overview

There’s tons of options for hiding cables. Special trim that’s hollow or has a groove in the back etc. Or simply run the cables in corner of ceiling then a piece of crown moulding to cover it etc.