I bought a house last December. Right now I rent it out to 2 other people. I have 2 other rooms and trying to rent them out. My buddys said is a contractor and he said he would live in the shed if I remodeled it into a tiny home up to code. He said hed pay 800-1k/m. Its on a super nice lot thats over a half acre in a super nice neighborhood. Very secluded and quiet.

About the shed. Its 2 stories. First floor is a work shop and has lower ceilings. Probably 6'4 ceiling. Felt like I had maybe 4-5 inches above my head(im 6 feet with shoes). Not including when we put a ceiling up and floors.  

So is this worth turning into a rental if I can do it under 30k? Will lower ceiling deter people? I can add a drive way to the back made of gravel, is that worth it? Any other feedback on this.

If the renovation costs $30,000 and the unit rents for $800 a month, it would pay for itself in 37.5 months (assuming no repairs, no vacancy, etc.)

I'm always skeptical of a "buddy" making promises. What if he flakes out? What if he was exaggerating and will only pay $500? You need to research your market and determine the true, objective value of what you're considering before you put a dime into it and make a big mistake.

And have you checked zoning to confirm this is legal?

Originally posted by @Nathan G. :

If the renovation costs $30,000 and the unit rents for $800 a month, it would pay for itself in 37.5 months (assuming no repairs, no vacancy, etc.)

I'm always skeptical of a "buddy" making promises. What if he flakes out? What if he was exaggerating and will only pay $500? You need to research your market and determine the true, objective value of what you're considering before you put a dime into it and make a big mistake.

And have you checked zoning to confirm this is legal?

 I called and found out that they are putting something up for vote in my town. Its super small around 8k people but centralized and avg income is over 2x the state. Very nice sought out area. The guy said they are voting to make mother in law to make this legal. Theyll be voting in december. If it passes do you think its worth it with such low ceilings?

Anything will rent if the price is right. I've seen people renting walk-in closets. 

Its up to you to study the market to determine demand and pricing. Then talk to contractors and figure out the cost. Compare cost to benefit and make a decision.

@Account Closed in my area any inhabitable space requires a minimum ceiling height of 6’-8”. Might be something to check on with your local building official before devoting too much time to the process.