My suggestion would be to drive a hard bargain on the house you are already living in. Get the best possible price. Looks like your landlord is a motivated seller. you have an opportunity to get a big lot for the best price. You are already living comfortably in two rooms. Don't renovate for a few years until it is necessary. Save up and then renovate as you like. As @MalStrom suggested get an appraisal from the bank to get an idea.