In-law units can be furnished with very little cost by buying from Goodwill stores. Detail clean it before bringing the item in. For fabric covered furniture, vacuum, then use a lint roller to pick up clinging hair and other particles that resisted the vacuuming. Then spray the fabric parts dripping wet with Fabreze fabric freshener. When it dries the furniture will be as good as if it had been dry cleaned. Wipe down the legs and non-fabric parts with furniture polish from Dollar Tree. The executive chair on the photo is a perfect example. The cushion feels as good as new, the missing arm rest is no big deal as long as it did not cost an arm and a leg which a new one would.
Goodwill stores also have elegant decors that are inexpensive. With careful picking and cleaning the in-law unit can look just as good as a regular apartment. The copper vase and fake flowers cost $8 and would have cost around $20-25 if brand new. Remember that just because the place is small doesn't mean it's unlovable.