I see a lot of people considering these ideas on the Bigger Pockets Forums - so you might ask there too. It seems like several people a week ask about building tiny ADU's or container homes, etc.
I think the challenge with tiny spaces is that they don't appear, at face value, that much cheaper to build. I could be skewed based on what other builders charge to make them, but the price per square foot doesn't seem to scale down as much as one would hope. If you can reasonably build them yourself, that may not be a factor.
I think I'd be concerned about the spaces getting more wear/tear than a regular rental. Being smaller, they would get "lived in harder" - if that makes sense. I'm assuming turnover of tenants may be a little higher too - only a certain percentage of people can live tiny for longer than a year or two. I imagine as tenants decide to grow their families or relationships, they opt to move into a larger space, perhaps causing higher frequency of vacancy? But that just speculation.
Long term, I think the concern would be that a (permanent-structure) tiny space may not appreciate at the rate of a larger space.