She Shed Ideas Inside! Transforming a Backyard Playhouse

Since we built the kids playhouse in the backyard 5 years ago, we’ve been putting off finishing the interior. There were always projects around the house we needed to work on. It never made it to our to-do list. Finally, a month ago I decided to give this neglected place a complete makeover. Here comes she shed ideas inside this art studio transformation!

This was a low-budget DIY project, completed within 3 weeks with me working solo most of the time. Even though it is not a full-blown outdoor office or Accessory Dwelling Unit (ADU), it is functional enough to be used as an art studio in spring, summer and fall, like a three-season porch. The transformation turned this bare-bones playhouse into a cozy retreat for the whole family. Read on to learn how we did it and our design choices.

Playhouse interior in its original state

After the makeover

What is the least expensive way to cover walls?

Since this is just a playhouse, with such a small space, I didn’t want to spend too much on finishing the interior. My goal was to keep it simple, functional, and budget-friendly.

The most common—and affordable—approach is to leave the interior unfinished. I’ve also seen many people paint the inside white or add a splash of color for a playful touch. Both are no-cost or low-cost options that work well.

In my case, though, we had already installed Tyvek wrap under the exterior siding. That presented a bit of a challenge: plastic surfaces don’t hold paint well, and leaving the studs exposed felt a little too rustic for me.

After exploring a few alternatives, I decided on 4×8 shiplap panels. I’ve used these before to create accent walls in my son’s bedroom and the guest bedroom/home office. I love their clean, modern, minimalistic look. The large panels serve as both a wall covering and a decorative treatment, making the space feel finished and elevated at the same time.

Keep in mind, I didn’t insulate or seal the playhouse. The roof design leaves open gaps along the sides, which keeps the interior dry while allowing for airflow. However, shiplap panels aren’t waterproof and may warp in humid conditions. If your playhouse or shed is exposed to moisture, consider using a more durable material like marine-grade plywood or tongue-and-groove paneling instead.

Tips for installing shiplap panels

I spent about $250 on six sheets of shiplap panels. I had them cut down at Home Depot so they’d fit in my SUV—68″ lengths did the trick and made them way easier to carry, too.

Then I had to load them up myself, drive them home, and haul them up the stairs to our two-story playhouse. Let me tell you—it was a full-body workout!

Installing them wasn’t exactly a breeze either. These panels are big and awkward, and I was working solo. Trying to hold them in place and keep them straight while nailing them was… frustrating, to say the least.

After wrestling with the first few, I finally figured out a few steps that made the process a lot smoother:

1. For window cutouts, use toothpaste to mark the corners. This way you can transfer the cutout shape to the back of the shiplap panels.

2. Scribe the edges, because walls are never straight or plumb. I used a simple compass from Amazon, it has saved me more times than I can count.

3. Make sure there is blocking or stud behind where the panels meet, otherwise you’ll end up with floppy panels or seams not lining up.

4. Use shoe molding, quarter round or lattice to cover the corners and hide the rough edges. This provides a more professional look.

Above all else. Do your best, caulk the rest.

How to trim out windows and door?

After I finished paneling the interior walls, the bare windows and door really stood out—they looked totally unfinished and out of place. Luckily, I had some leftover trim from our basement project, so I decided to repurpose that and keep the cost down.

Trimming out windows is pretty straightforward in theory, but getting all the pieces to fit snugly with clean joints is where it gets tricky.

I started with the window stool. First, I measured the window opening, then added the width of the casing on both sides, plus the desired overhang.

Here are the formulas:
Width of stool = window opening + (casing width × 2) + (overhang × 2)
For the playhouse, that worked out to: 23.5″ + 3.25″ + 3.25″ + 0.75″ + 0.75″ = 31.5″

Depth of stool = window depth + apron depth + overhang

For the playhouse, it turned out to be: 3″ + 0.75″ + 0.75″ = 4.5″

Once I had the dimensions, I notched out the stool and used a jigsaw to cut away the excess. It was a tight fit on the first try—not bad!

Next up was the window jamb. I precut all the pieces in the garage (way easier than dragging the miter saw up to the playhouse). The measurements were spot on, but I didn’t realize the top jamb would shift upward slightly once nailed in. That left a noticeable gap between the top and side jambs.

So, I cut a little filler piece to patch the gap. Not perfect, but honestly, no one’s going to notice.

Then came the window casing—the part where things can get messy fast. If I had my choice, I would’ve used simple primed 1x3s and gone with clean butt joints. But since I was using leftover trim with a decorative edge, I had to do mitered corners instead.

Because of the earlier jamb shift, the miter joints didn’t line up perfectly and left some gaps at the bottom. Cue the filler piece and caulk LOL.

Want more storage? Try these brilliant ideas

This tiny playhouse was basically just a box—cute, but with zero storage. So, to make it more functional, I got creative with three (pretty genius, if I do say so myself) storage ideas:

1. Deep Window Stool

Instead of a basic trim piece, I built the window stool to extend 3/4 inches into the room, turning it into a handy shelf. These are not large windows. But by having slightly deeper window stools, I added bonus space for a good book. Or small items like cups, plants, or toys. When I was working inside the playhouse, I often used it to hold tools—super practical!

2. Floating Shelf

Thanks to the gable roof, the back wall forms a triangle, which provides extra space for shelving. I installed a 7-foot-long floating shelf back there, using the same method I used for the wet bar shelves in the basement. It was super budget-friendly and only took a few hours to put up.

3. Hidden Cabinet Between Studs (With a Picture Frame Cover)

Since I didn’t insulate the walls, the space between the studs was just sitting there—empty and full of potential. Why not turn it into hidden storage?

The studs are 16 inches apart on center, and I happened to have a 16″ x 20″ picture frame that I could use as a cover. I built a cabinet slightly smaller—14½” wide and 18″ tall—so it would fit snugly between the studs. Once it was in place, I added trim to clean up the edges. If you’re working with drywall instead of paneling, you could tape and mud the joints to make everything flush.

To finish it off, I attached a metal cabinet hinge to the picture frame and the wall so it opens like a little hidden door. It’s one of my favorite features—it feels like a secret nook.

Adding personal touch with furnishing

This small shed had never looked this nice before. Once it was all finished with interior trim and wall covering, it was time to add personal touch and decorative accents.

I wanted this to be an addition to our main house. A place that we can get messy without worrying about keeping it neat and tidy.

I brought in some comfortable seating such as these cute patio chairs, an outdoor rug (which turned out to be the kids favorite), and a small table for drawing (it can tilt all the way to 60 degrees, perfect for painting).

We’re getting plenty of natural light in this space. It’s a quiet place to get away from the daily hustle and bustle.

The interior of your shed is full of possibilities, you can turn it into a reading nook, add a potting bench for garden tools or a bar shed with outdoor dining furniture.

How much does this playhouse makeover cost?

This playhouse makeover proves that even a little bit of sweat equity goes a long way. The total material cost was a few hundred dollars. It’s so nice to have this dedicated space for lounging, arts and crafts and just hang out.

If you’re interested in how we built this playhouse from the ground up with absolutely no construction experience, check out the step-by-step here. Until next time!

Posted By: Sherry · In: Home Renovation