Jeez -- you're braver than me ! Lets start -- you take off all the tiles individually , remove the wiring , remove the crossmembers and gutterings and old insulation and building paper , frame it higher , probably new crossmembers , reassemble , find new matching roof tiles because you can guarantee some won't survive , timber that matches , re-gib the inside ( possibly the whole walls depending on condition ) , decide if you retain the windows ( I suspect they'd look too small / low ) or new windows , and same with the doors . Repaint / wallapaper / maybe blinds . The materials more difficult than expensive ; but the labour would be expensive . And what do you end up with ? Not really much IMO . A taller version of a fairly plain 1980's house . That's a bit harsh -- it's going to be your home . And the cold-hearted ( haha ) part of me would ask will it make it worth any more ? Do you spend $50K ? Do you think you are getting a bargain and its worth it ? Do you pass on the house ? Do you modernise the whole house ? The house next door makes me think its in a 'better' neighbourhood , so maybe live in it for 2 or 3 years , and do a $200k remodel . Just doing that rear part doesn't strike me as a great idea ( unless you are all 2.4 metres tall haha ) , BUT then I don't know the whole story . . . . . . . .

I think if you were willing to lose the back covered porch next to the bath, you could extend the bathroom and just have a walk way to those stairs. What concerns me about using the meals area, however, is how you would access the stairs to the cellar. That is something you need to figure out. Walk around your house, consider the options and walk the spaces to see how they might work for you. If you have trouble visualising it, you may need to measure it all out and draw up a plan of the space yourself. measure your furniture and cut little shapes to scale and move them around the plan to see how they fit. The bigger your plan, the easier it will be to figure it out. You need to think, too, about how you live in the spaces at the moment and what works for you as well as what doesn't. We lived with our kitchen for three years before settling on a layout we both agreed would work for us. We totally renovated our downstairs, changing the layout of the spaces and putting up walls to define spaces in what had basically been a walled in under house area. We discussed, changed and drew out the layout about 4 times over about 18 months, until we got the one that just felt right. We have lived with it for 18 months now and it is working very well, enhancing the way we live just as we wanted it to. My point is, don't rush to a decision. This is going to cost you a lot of money and you are going to have to live with the result for a number of years. Think it through carefully and figure out what will work for you and your family.

have you investigated the subdivision.. , legal restrictions and fees, which block would you keep, is it big enough for what you want to build, what is the minimum size would each block would have to be, what amount could you expect to receive from the sale after fees, what space does the new driveway use? a small block at the front and bigger block at the back would waste less space on a driveway or is the block wide enough to subdivide lengthways without a driveway..you said the small house is "in the middle" but have you made a properly sized site plan to show exactly where it is ..my brother subdivided his block with an Lshaped boundary to allow for an existing house..lots of questions that need answering before you can make the best decision but in the end do you want to have a house on a small block with such a close neighbour when you already have a big block.?

I'll tell you what -- I love 75% of the bathroom -- that rustic style is different enough , and well enough done , to be different but great ! Then the tiles and cupboard doors let it down -- try and stick to the rustic styles there too would be my thoughts . The kitchen looks to have good bones , obviously the benchtop has to go , and maybe a bit of colour and new flooring , but it seems to flow okay , and looks great . I'd probably keep the stainless sink , but onyx marble benchtops would be classy , add more modern tiles and/or a splashback ( depending on colours , how about just basic white square 150 x 150 tiles , with a horizontal top row of black or red or orange subway tiles on their sides ? The lounge , in comparison , is all over the place . Light wood , purple carpet , and ( shiver ) a faded look on the coffee table . Take it outside and shoot it , burn it , it's just wrong ! The lighter wood panel might work , or maybe stain it dark , paint it white -- it depends on carpet tones . A wheat colour carpet , for example , with mid reddy brown stain wall , the bricks under the fire , it would look a bit rustic but with a tinge of class ! So what about changing the rooms ? Here's a quick idea -- The main 'rustic' bathroom could be turned into an en-suite for the 'upstairs; bedroom ( I assume that is the master ? ) , through a walk-through robe . The downstairs bedroom seems to have a shower and toilet ( almost its own en-suite ) but possibly keep the 'direct' door to the upper bathroom , as well as an entry from the upper bedroom , so the bath can be used by everyone if need be . You also have a seperate toilet there too , and the laundry is okay -- you'll spoend money doing one under the house , but not really gain much space , because of the door into the laundry ( I assume that door is useful , but what it does it makes enlarging the kitchen , or moving the bathroom more difficult ) . In other words , no real gain . It looks and sounds like it works okay -- why spend $$$ that aren't needed to be spent ? Just some minor stuff , maybe some furniture , Spend $30k and it will be getting close to what you are after IMO .