One of the most effective ways to make a small home feel larger is to live in an even smaller one first—something architect Michael O’Sullivan and his partner Melissa Schollum experienced firsthand. The house O’Sullivan designed and built for himself, Schollum, and their three young children in Auckland, New Zealand, has just two bedrooms and is a modest 1,200 square feet. This, however, is positively luxurious compared to their previous accommodations, a 450-square-foot former classroom they purchased, moved onto their property, and lived in for almost two years while their new home was built beside it.

The old classroom, which was sold and moved off the property after the new house was completed, could only be described as constricted. O’Sullivan and Schollum’s sons Seamus, then just a year old, and Finbar, then a newborn, slept in cribs squeezed side-by-side in a communal sleeping area separated from the small kitchen, dining, and living space by a curtain. When O’Sullivan’s 10-year-old son Remana would come to stay, the only available place for him to sleep was under the dining table. “People would visit and look at us in disgust, as if they were thinking, How could you do this to your kids?” O’Sullivan remembers.

Those friends don’t look disgusted when they visit nowadays. O’Sullivan and Schollum’s new home may be compact in size, but it is also a light-filled, inventive, one-of-a-kind abode that elicits equal amounts of admiration and envy—especially when it is revealed that, thanks to a lot of free labor from O’Sullivan and the couple’s helpful neighbors, the house cost just over $100,000 to build. And after all that time in the tiny former classroom, the new home feels much bigger than they dared to expect. “The inherent fear for most architects is designing a house that’s too small and too confining,” O’Sullivan says. “We didn’t worry about that because we had already lived in a small place for so long.”

Even so, you can see why people thought they might be crazy. O’Sullivan was determined to build the house himself, but because Schollum, a former travel consultant, was busy taking care of the children, he also needed to keep working at his architecture firm, Bull/O’Sullivan Architecture, to ensure the family had an income to pay for their new place. This required the adoption of an exhausting new routine: O’Sullivan would go to the office around 5 o’clock each morning and return home in the afternoon to work on the house until sundown, all the while trying to keep to their almost-impossible budget.

There was another major complication: Despite being handy, O’Sullivan had never actually built a house. He quickly discovered his aspirations outstripped his abilities, as he spent hours puzzling over how to make things work. His lack of prowess with an automatic nail gun meant he once shot a nail through a copper water pipe, causing a leak that a plumber had to be called in to repair. More seriously, on another occasion he accidentally shot a nail into his hand, resulting in a wound that required stitches at the local hospital. The upside to these difficulties was that they gained the attention of neighbors, who offered to lend a hand. After this, O’Sullivan had help from at least a few of them almost every evening. Even better, some of them had actual building experience.

The house is in a harborside suburb on the flanks of Mangere Mountain, one of the most beautiful of the more than 40 dormant volcanic cones that punctuate the Auckland isthmus. The summit’s 360-degree views of the Manukau Harbour and surrounding landforms made it a site of great strategic importance to early Maori tribes. It is also an area whose proximity to some of the city’s less affluent suburbs means property there is still relatively affordable. Most of the neighborhood is made up of one-story weatherboard homes built in the 1940s and ’50s; O’Sullivan and Schollum’s subdivided site, which had no existing house on it, includes a driveway shared with neighbors and features a diverse range of mature trees, including a large American oak beside the street, mauve-flowered Australian jacarandas on the southern boundary, and a handful of ti kouka, the slender New Zealand natives also known as cabbage trees.

O’Sullivan developed his design while closely observing the way the sun played across the site in different seasons. He began by building a series of cardboard models, eventually deciding to locate the house close to its southern boundary with its living areas facing north and west (which, in the southern hemisphere, is the correct orientation for optimum solar gain). The home’s living pavilion is nearest the street, its mono-pitch roof angling upward to pull late-afternoon sun through tall, slender windows. On the west, it opens to a deck shaded by the oak, while on the east, a larger deck features an outdoor dining area and a lockable gate to prevent the kids straying onto the driveway. Auckland’s temperate climate means both these outdoor spaces are usable all year. The laundry, bedrooms, and bathroom are arranged in linear fashion off a corridor along the back of the eastern deck.

After years of dreaming up everything from small house renovations to large office buildings for other people, O’Sullivan found an exhilarating freedom in designing and building his own home. “I was forever changing my mind on things—new opportunities to experiment were always coming into my head,” he says. The home’s northern face is clad in a modular aluminum weatherboard system O’Sullivan designed himself, while its southern side is coated in an easily applied glass-reinforced bituminous membrane normally used on roofs. He spent many hours designing and fabricating the kitchen’s cedar shutters and timber joinery, as well as the living pavilion’s intricate cedar weatherboard ceiling, which has triangular holes for recessed low-energy lightbulbs.

These labor-intensive touches mean the house packs a much bigger punch than its budget would otherwise have allowed. It also meant O’Sullivan and Schollum had enough cash for strategic splurges on materials that further enliven the home. In the kitchen, O’Sullivan created an island with ethereal brass cladding. The bathroom is lined not in the plywood that covers the rest of the house but in vivid green marble. Instead of interior doors, they opted for heavy velvet curtains. “We knew from our experience in our old place that curtains were sufficient for separation,” O’Sullivan says. “We felt doors would unnecessarily truncate the spaces.”

The end result is a place that transcends its bare-bones budget, making it hard to imagine a home more perfect for this site and this family. “Maybe because we had put so much into it, it instantly felt like home,” Schollum says. O’Sullivan, too, experienced an immediate sense of satisfaction. “It felt sensational as soon as we moved in,” he says. “I still come home early so I can watch the sun move through the space.” The house has since won a clutch of architecture awards, but perhaps the most ringing endorsement has come from the couple’s daughter, Mary, born two weeks after they moved into the house in September 2008. The unusually happy child almost always sports a smile, which her parents like to think of as her wordless way of expressing approval for the home they built just in time for her arrival.