Measure the attic dimensions. Wear a paper mask while checking it out, if insulation is loose between floor joists. Place sheets of plywood or boards across rafters for walking. Measure ceiling height in all sloped areas. Assess how much headroom is available for constructing one or more rooms.
Sketch an attic remodel. Include one or two dormer windows or a small walk-out deck. Design a very specific fire escape space, such as having large dormer windows or a sliding glass door adjacent to a roof deck outside. Draw a detailed floor plan layout and attic access area for stairs.
Frame access stairs to open up the attic space fully to the floor below. Go into attic space to frame walls and lay sub-flooring over insulation. Designate room for a bathroom and small kitchenette to create an apartment. Create the skeleton of the rooms and figure out routes for new electrical wiring and plumbing.
Insulate attic walls and cover them with drywall. Insulate ceiling areas heavily with fiberglass roll insulation laid on top of ceiling drywall. Finish drywall with joint compound, sand and paint.
Work on the kitchen and bath before flooring the space. Seat bath fixtures and install kitchen cabinets and fixtures. Create a tiny kitchen with a sink, microwave and small refrigerator, if space is extremely limited. Use hardwood or tile throughout the space for all flooring.