Detached Garage Conversion to Multiple Bedrooms

[Taylor Dean]

I own a duplex with a detached 400 sqft. garage with a half bath and electricity already in it. I spoke to the city which I live in and they said yes, I can convert the space to multiple bedrooms as long as I permit everything and build it to code. They said that each bedroom must have an exterior door and there must not be a door leading back to the garage from the bedroom. I would let the bedroom renters share the space of the half of the duplex I do not live in.

My questions:

Would people be interested in renting the space? It's waking distance to a large community college, grocery store, restaurants, and is on the bus line.

If I do a majority of the work myself how much might this project cost in SW Washington?  

Would I be better off taking that money and buying another property?