So maybe it's not the grandest house on the block. It might be small, but you can afford it. You might be able to turn that small house into your dream home with the right remodeling and expansion. One caveat: Make sure you don't overdo it and expand your house until it's bigger than other houses in the neighborhood. You'll end up paying higher property taxes with less of a chance to recoup your investment when you sell.
Check with your municipal zoning office regarding required setbacks for side and rear yards before you make any addition plans. Work with an architect to ensure any expansions conform to zoning. If your addition can't meet minimum setback requirements, it's possible to go before the local zoning board and request a variance. This process might be time-consuming and expensive, as you might need your architect and attorney present. Your neighbors will also be noticed, and can appear to voice concerns or support. Besides typical additions on the rear or side of a house, consider adding a second floor if your small house is a one-story. Such an addition can potentially double your living space.
Small, older houses might have separate dining rooms, however cramped. Turn the separate living and dining rooms, if contiguous, into a great room by removing walls and doors. If a dining room isn't contiguous, let it serve more than one purpose. If your kitchen is large enough to eat in, turn the dining room into an office or playroom. Put in a sofabed for use it as a guest room.
Let there be light. Making the house as light and airy as possible gives the appearance of more space. Replacing older, smaller windows for modern, larger ones increases the light coming into the home and saves energy through better insulation. You might also install a greenhouse window, not only to increase light and space but to bring the outdoors in. Consider installing a sliding glass door for a back entrance to both increase light and make access easier. On the ceiling, install skylights to bring in additional light.
If your ability to expand outward is limited, see what sections of the house might be converted into living space. Remodelling a basement is an obvious way to go, but also consider enclosing a porch to create a den or play room, or making an attic space into an additional bedroom or office.
Remodelling and Decorating
When remodelling, work to make traffic flow as easy as possible. Besides windows, use mirrors and lighting to enhance an impression of larger space. Get rid of clutter -- less is more. Include furniture that doubles as storage space. In any case, include as much storage space as possible in your remodeling plans. Knocking down a wall may not work in your particular home, but consider replacing a door with an archway or removing a door from one room to another altogether.