Fwiw I own a duplex in a very popular Oakland neighborhood with something very very similar to this in the back. My cabin is about 190sqft with a full bath. It even has its own private patio which is about another 300sqft.

I am unable to rent it out because it is too small per city rules and it doesn't have a kitchen. I could rent it out illegally, but if there was any dispute with the tenant, the tenant could retaliate by suing me for renting an illegal unit. In a dispute, I could be forced by the city to pay back ALL of the rent said tenant paid to me, ever.

My cabin sits vacant.