If the bed was mounted on top of the desk like this people could live in a very tiny area. 

Even a tiny one. 

Wouldn't someone rather work on their computer outside in a yard than in a tiny room? 

I’m not in CA where I can charge $1000/month more for a tiny garage conversion.

Here in my department the process starts with our planners which cover zoning and will determine the type and quantity of structures you can build.

If your mortgage payment was $500 per month you would have at least a tiny bit of cash flow. 

I'm looking at small tiny strips or former bank buildings as a potential flip.  

By selling their present house they'll be able to get a large house inland and occupy a tiny percentage of the total meaning a terrific investment. 

Ideally each would have a tiny kitchen that is modular and customizable for their needs so that big kitchen mentioned above could be eliminated and 2 more units added. 

Landlord judgments can also make it hard to rent in the future, something worth reminding them as a reason to work with you to pay the debt...Another option is offer them a cash settlement verbally for a tiny portion of what is owed.