Living in converted attached garage ADU and renting the house

[Mitch Howard]

We have a bi-level home with attached garage. Looking to turn the garage into a granny flat 1 bed 1 bath. I've contacted the township and as of now, it looks like they're allowing ADU's. I'd obviously confirm before moving forward.

We don't need the house and most of it is just wasted space right now. 4 bed, 2 full bath with a finished basement. I want to rent it out to be mortgage free. 

I would pull permits and do plumbing, electrical, and finish work myself while living in the garage. The garage already has plumbing for a sink, electric, and a full size furnace from previous owner. (lol overkill) 

I'm just thinking out loud I guess. We're pretty frugal people and simply don't require much space or 'things'. I thought this would be a good way for me to get my feet wet in RE investing. I've been told to just buy an investment property but I don't really see the logic in that when I can finish out my garage myself. 

Does this sound like it would work? I would think a garage conversion would also bring more value to the home. 

What are pros and cons of this? Anyone ever done this? I know they're popular in California but definitely not in Northern MI.