Bravo to all these amazing creative minds. I hate wasting stuff that still has life in it. By the way, though I have read that some pallets are treated with a fumigant which is toxic. Generally, make sure pallets are stamped with “HT”, which means they haven’t been exposed to chemicals (at least not in the treating process.) Avoid unmarked pallets or those with “MB” for methyl bromide. Well, if anyone wants some really nice, bargain 2nd hand windows we just pulled out of our 12 y-o house to make way for a sliding door, and you live around Melbourne Australia, please check them out here: http://www.ebay.com.au/itm/112070272414?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1586.l2649

thanks everyone. oklouise, plans look fantastic! After some serious evaluation and looking how much garden would be left at the back with all the bedrooms downstairs (and wanting to put an 8x4 shed at the back) we are almost concluding that we need to put some stuff upstairs to maximise the block. Initially we thought about just one room but it seems the setup costs to get up there (approx 60k we've been told) make us think we may as well put more up there and maximise the size of the block to allow us to have a garden and veggie patches, trees, chicken coop etc. I was concerned if we gave the kids their own space upstairs we would never see them, but I think in reality putting the second living area upstairs with 2 bed and a bathroom is probably going to extend the life of the house and appeal to more if we do well it later.. . I also read a few chapters of a book from the 1970s architect talking about the optimum design for small families suggesting that there should be 3 non bedroom areas; one for children, one for adults (to not be parents) and a common area for both, which resonated with me - can't recall the name of the book. We spoke with a engineer 're the excavation for garage and they estimated 60k, and I think I'd prefer to build up in that case. not sure if I would bother with a balcony though as it would push us to to 3 outdoor areas, but may really improve the facade with a balcony... listened to those podcasts from the undercover architect - absolutely fantastic. so much food for thought. Now realise how lucky we are to have the view north.

okay so I haven't read all the ideas and comments so forgive me if I'm doubling up. What about lifting the house up? Maybe you could have it raised to the same height as entry. It might seem drastic but isn't as much as you think. That would keep the original footprint of house on block, and have plenty of space under for a granny flat. My parents had a house like that. They built a big carport that came off the driveway and it connected to the house. It was essentially spanning the gap. the drive sloped down a ways and then the carport came across.

now that we have the dimensions of the block you can see how much land is available and you will need to decide how to place the house on the block?? the best location would take advantage of passive solar design for which we need to know the direction of north and the local climate and how you want to use the gardens but something like this might work? and kitchens with living areas upstairs could make sense if the block was suitable eg land slope down from the street with views to the rear.... without more information about the block and who will live in the house no one will be able to answer all your questions but, if this is a flat block in an average new subdivision with new homes surrounding then it's usually better to build what most people would have with kitchen and living areas downstairs (you could also add a kitchenette to the upstairs living area for drinks and snacks) with most daytime living connection to outdoors especially if there will be children living in the house