You must first reach a certain level. Probably 30 or 32.

Then you must talk to Jim (the lumberjack outside of the school). He'll talk to you about getting a 2nd floor.

I won't bother explaining what you have to do from there, because Jim will do that himself. But if you already have a backyard (level 16 required), it works exactly the same way.

At level 60 you should talk to Jim again and he'll confer with you about getting a basement (works the same way as the backyard and 2nd floor).


It's really quite simple, you just gotta be the right level and remember to talk to Jim.