One of the largest considerations in a tiny space is the sleeping area. If you are young, nimble, and adventurous a sleeping loft may be your thing. Both of my teenagers love the lofts.
While the lofts do have windows now, and also some half decent headroom, the mid-night journeys up and down the ladder to visit the tiny girl's room have not been my cup of tea. I tried it for 3 months and while it was definitely do-able, it really is not my preference if I had my druthers... which I do!
So the convertible, first-floor sleeping arrangements are what I decided upon. During the winter this will give me quick and easy access to the wood stove in addition to the tiny girls room.
I have researched many options including Murphy beds, hide-aways, and sleeper sofas. Given my time-frame and the amount of building I need to do on other projects such as the dinning room table, closet space, and finish work, I decided to go with the sleeper sofa option.
Keeping with my recycle, reuse mentality (and my budget!) I searched Craig's List, EBay, and local thrift stores for options. After a few weeks of searching I found a wonderful second hand sleeper-sofa on Craig's list that was pet and smoke free. It does not match the decor I had in mind for the living room. However, I've never re-upholstered a couch and it sounds like a great, cold-weekend project.