Planning and zoning will be the biggest issue, depending on your county. Many areas you end up doing the full sewer, fire, insulation, etc and the temp corner of the shed for a home is going to cost mucho bucks, so that you won't be able to afford something new down the road.....
Myself I'd be careful about fumes and such, a lot of that oil, fuel, grinding, welding makes for some interesting fumes floating around the building, not sure I'd want to live in that with the family all the time.
Third issue is insurance, you are putting all your eggs in one basket, fire (more likely in a shop area) is risking everything you own, shop, equipment, home, furnishing, family, all in one roof. That's harder to insure and might be something to think on.
Lots do it and do it well just think it all through.
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Today's Featured Article - Old Time Threshing - by Anthony West. A lovely harvest evening late September 1947, I was a school boy, like all school boys I loved harvest time. The golden corn ripens well and early, the stoking, stacking,.... the drawing in with the tractors and trailers and a few buck rakes thrown in, and possibly a heavy horse. It would be a great day for the collies and the terrier dogs, rats and mice would be at the bottom of the stacks so the dogs, would have a busy time hunting and killing, all the corn was gathered and ricked in what we c
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