I'm considering converting the shed into a DADU to maximize the use of the space and earn some extra income. 

I was intending to rent out the upstairs 3/2 as an LTR then convert the basement to a unit for myself half the year and rent it out as an MTR (midterm rental) when I wasn't there.

My worst story was while I was flipping a house with a converted garage (no permit).

Let any potential renter know that you intend to convert the garage into an ADU and address any potential issues created by adding the ADU (parking, shared yard, quiet hours, etc.)

We converted a old restaurant on the property to a coworking lounge, redid the pool and built out the roof to a entertainment center with fire pits, lounges, bubble chairs, barbeque, large screen TV, music, yoga mats and amazing views of the ocean and city lights.It is designed for coworking/coliving for business professionals and entrepreneurs who want to...Live where they work.

It should be as easy as converting one conventional loan that cashflows well to a Debt Service Coverage Ratio loan or DSCR.

The Mastros had been living in an apartment in a recently converted 1840 mansion in a hamlet called Marceau in the hills above the town of Doussard, France."

Vacant land or small property that will be converted to 23 units?

It would be quite costly converting away from propane and due to high electricity cost i suspect t not warranted.  

I also look for properties with larger lots that I can put tiny houses on or convert sheds.