1st 1/3 of make it dope, pimped out, extra insulated, tile floor or concrete, finished out. Maybe two bedrooms.
More and more people are building shop/houses (shouse) like you describe. Some of them are pretty dang nice too. If I had to do it over again, that is what I would do.
A cousin did that, too.
He had been partners in a body and paint shop for a good number of years, but partnership broke up. He then had a big, nice looking new outbuilding/shop with efficiency apartment and full plumbing built on some rural acreage he already owned where he and wife planned to eventually build their dream house on.
While their new house was being planned and then built he and wife lived in the efficiency apartment and he continued to do wreck repair and paint jobs in main shop portion.
Now the shop is devoted entirely to his wreck repair and paint business and they live in their new dream house just a few steps away.
