A 12x16 cabin fully finished with insulation, electrical, climate control, and interior walls might total $10,000 to $18,000 all-in. A 192-square-foot home addition at $150/sq ft would run close to $30,000, and that's before it gets complicated with architectural plans and months of disruption.
The trade-off is that a converted shed isn't attached to your house and may not have plumbing. For guest space, an office, or a retreat, that usually doesn't matter. For a full-time living situation, a home addition may be the more practical route depending on your needs.
