We subdivided our block - the original house was way off to one side and we are living in it at the moment - and are building a new house. The builder is being mindbogglingly slow getting back to us about how much it is going to cost, but it came to about $14,000 for the subdivision and will probably cost $120,000 for the house once we add in all the juicy extras. We're in the country though and are building a reasonably large and fancy transportable - the starting price of the house was $85,000 so there's a LOT of extras above the listing price.

You can usually get something decent built for $160k and subdivision is usually around $20-40k, depending on how much sewage and water works you need.

Watch out for sloped blocks - sometimes it can be impossible to divide and build two houses on a block with a slope the 'wrong' way because the rear house needs crazy easements to get the water to the street.