funny you should mention that!
i played in a band once that recorded in a garden shed and a small caravan. the drummer and me (rhythm guitar) in the shed. lead and bass in the caravan, direct inject, obviously! you may think "hah, small time" but the owner played us Bonnie Tylers demo of "Lost in France", which he recorded, and he'd previously sat in on Queen's "Bohemian Rhapsody" up in Rockfield!
now for some advice; the cardboard type egg boxes are a good sound proofer, nailed to the walls. or if you've got a few quid to spend, upholstery foam. it'll still be cheaper than real sound proofing. by the by, it's drums that take up most of the room, but they make a lovelly sound!