When Chester and Chloe found an inner-city terrace home that fit their budget in Sydney, Australia, they knew they had to snap it up.

“If you were to go back to 2017 and try to buy a terrace for under a million dollars, it just wouldn’t happen,” Chester says. “We came across this one and it was $850,000 [$564,000 USD] and we stretched ourselves to afford it. It was a one-bedroom, one-bathroom piece of sh*t, to put it nicely.”

It might have been a bomb, but the location was perfect: Camperdown is a trendy suburb about two miles from the CBD where Chester works in finance and Chloe in law.

It was a typical Victorian-era worker’s cottage, with an ’80s terrace extension that did little to improve its dark and dingy vibe. But that was the appeal, Chester explains: “The fact that it was a blank canvas.”

The couple initially planned to spend $300,000 Australian dollars (about $193,000 USD) on a modest revamp that would add a second story, and save the major makeover for later. “What we found was that whether we did a minor renovation or a significant one, there would be substantial costs,” Chester explains. “If we were to go the whole hog and do it properly, it would only cost a hundred grand or so more than we had planned.”

$850,000 Existing House	$492,000 Site Work & Builder Fees	$17,000 Foundation
$3,000 Flooring	$13,000 Landscaping	$68,000 Joinery
$7,000 Countertops
Grand Total: $1,450,000 AUD (about $966,135 USD)

Luckily, Chester and Chloe knew exactly who to call: Chester’s mom, architect Justine Money of Noho Architecture.

“He said, ‘Mom, can we do something with this?’” Money recalls with a laugh. “I said, ‘Of course we can, darling—but how much money have you got?’”

They settled on a budget of $450,000 ($290,000 USD)—before the pandemic arrived with delays and inflated material costs. “The raw building cost was about $570,000 [$365,000 USD] in the end,” Chester says, adding that they were careful not to overcapitalize, but they didn’t want to underspend and wind up with a generic result, either.

Knowing that the budget was as tight as the terrace’s narrow block (a mere 14 feet), Money got to work on creating a simple design that was “about getting light in wherever possible.”

Chester and Chloe also wanted a fresh, contemporary interior, and they were hoping to squeeze in two to three bedrooms and two bathrooms, as well as an office. They were both working from home a couple of days a week, and they needed enough space to live and work together comfortably.

Council restrictions meant that Money’s first design, with a large internal courtyard linking two separate living hubs, had to be scuppered in order for the extension to line up with the neighboring terrace’s renovation. So she reworked it to include a much smaller courtyard—“a light well, essentially”—that connects to a two-story box extension.

Money had also wanted to include a U-shaped staircase, but she ultimately dropped the idea in favor of a more space-efficient, linear stair that allowed for a laundry built in below.

“We just wanted to make it nice and clean, really pare it back and let the character of the old cottage stand out,” Money explains. “We used simple, thin awnings and maximized light with full-height glazing at both ends, which also gave us an opportunity for louvers for full cross ventilation.”

When they began the build, however, they quickly uncovered a problem: “We realized the original addition was built on fill,” Money explains. “That meant we had to get 1.5-meter [4.9-foot] piers in to support the two-story brick veneer structure.”

It also meant Chester and Chloe had to reconsider one of their favorite details in the design: a polished concrete floor. To stabilize the slab so that it could be polished without cracking, they’d need double the amount of steel rio mesh, which was about four times the price during the pandemic. “It was maybe an extra seven or eight grand [about $5,000 USD],” Chester says.

Alternatively, they’d need floorboards to cover the slab, which were similarly priced. “We ummed and ahhed about it for a couple of days,” Chester says, “but we really like the industrial look of polished concrete, so we ended up saying ‘let’s just do it.’”

Not all the surprises were bad ones, however: When they chipped off the render on the cottage’s back wall, they uncovered a decorative brick arch and the original timber lintel where a door once stood. “It was quite special to see that come through,” Chester says. It’s now part of the internal courtyard, which is visible from the front door and the dining nook, cleverly linking the new with old.

To manage costs, Chester and Chloe paid close attention to their builder’s quotes, interrogating every suggested item and dealing directly with suppliers to ensure they got bang for their buck.

Doing this legwork allowed them to score quality floorboards for half the price ($3,000 AUD / $2,000 USD) and a marble slab that they used in the kitchen, living room, laundry, and bathroom for $7,000 ($4,500 USD), rather than spending the same amount on a stone dupe. They splashed out for appliances that are on show—such as the Gaggenau oven—but opted for generic brands for less obvious fixtures like the dishwasher, tapware, toilet, and door handles.

“No one’s really going to know the difference in the quality of your toilet, so you can be ruthless with things like that,” Chester says.

Chester also spent a little more on smart home features, such as automated lighting and blinds, but saved by doing all the programming himself.

“You could pay a company thirty grand to come and do some really whiz-bang centralized automation process, but with Apple HomeKit and these technologies that are built into your phone, it’s really quite affordable to do it yourself,” he says. “That’s something we added for not much more money, but I think it adds a lot of value.”

In such a tight space, storage is essential, and the joinery in the extension was meticulously planned. “It was a painstaking process,” Chester says. “There’s about $70,000 [$45,000 USD] worth of joinery throughout the whole thing.”

But it’s what makes the space so livable, Money adds. “There’s even a cupboard where you pull out a coffee machine to make coffee across the width of the space,” she says. “They got everything in that they wanted, as if it were a normal-sized house. It’s just phenomenal how we packed it all in.”

With such a tight space to play with, Money admits she had been worried about how the finished home would feel. “I had palpitations thinking, one step I’m in the dining room, two steps I’m in the kitchen, another step I’m in a living room,” she recalls. “I knew architecturally and anthropometrically that these spaces do work, but what concerned me was, what is the reality of living like that?”

Turns out, “It’s an awesome place to live in,” Chester confirms. “In the living room, on a nice Saturday morning, you open the curtains and the bifold doors and you’ve got this big indoor/outdoor space. And with the central courtyard, as soon as we close the front door, we’re not in the city anymore. We’re in this little oasis.”

More Budget Breakdown stories:

Near Melbourne, Former Bandmates Make a Modest House Sing for $290K

He Remixed His Janky Shed Into a Design Studio for $6K

It Took $8,400 and Four Hours to Build This Tiny Cabin in the Australian Bush

Project Credits:

Architect of Record: Noho Architecture / @nohoarchitecture

Builder: Ezy Reno

Structural Engineer: Dennis Bunt Consulting Engineers

Cabinetry: Leading Edge Kitchens

Upholstery: Ambience Upholstery

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Budget Breakdown: They Turned a Narrow Sydney Terrace House Into an Inner-City Oasis for $397k