Plenty of business cards say “no job too small.” Builder Dan Upton and architect Jeff Shelton could reasonably have “no lot too small” printed on theirs. Not that either of them specializes in small projects — but they did complete a house on a 20-foot-by-20-foot lot in Santa Barbara, Calif.

Originally the lot was two parking spaces in the alley behind Neil and Sue Ablitt’s dry-cleaning business. After living on a boat for several years, the Ablitts decided they were ready to move into something larger, so they hired Shelton. He designed a four-story 699-square-foot home with one room per floor and a rooftop patio with an outdoor...

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