Have you gotten a bid on moving the furnace? I've never had this done, but it sounds expensive. You can't just pick it up and move it without also changing at least some of the ducting. Is the water heater going to be a problem where it is? While you do have dimensions on your drawing, it would be helpful to see it on graph paper. You need to show the support posts as you will not be able to move them. Or I guess anything is doable given enough money, but if you were thinking of moving them you should get a quote for that as well. Neither of these two jobs are DIY unless a family member is a licensed contractor of the relevant type.

Will the walls and floor need insulation? If so, have you factored that in? Will that leave enough space and a decent ceiling height?

Where is the egress window for the bedroom?

My husband is a licensed plumber and has friends in the industry. The duct and furnace will run us about 5,000. 

We will need insulation. We are just trying to work on a layout and understanding if we we might be trying to squeeze too much into 1 space or if anyone has ideas or previous experience with creating spaces that are multi functional. The window is by the back wall to the left of where the old storage was.

Some before pics when we bought

Do you need the space to function as a bedroom right now? Do you need to “add value” right now? It doesn’t seem like you have enough space to have both a living room and a separate bedroom. Do you have young kids who may need their own play area? Or a teen/young adult that needs a separate space?

Definitely do not need a bedroom right now. Baby coming in the next 3 weeks so I think a living room/play area is probably more realistic and if and when we need it to be a bedroom that space can be converted 🤔