I wish Forgotten Hollow had bigger lots...

Yeah, it is kind of frustrating. My best way to work around it, I found, was making use of the basements. You're allowed two floors down and like three floors above ground so you can get a loooot of use and space out of it; I personally made the lowest floor a crypt with tombstones and coffins.

If you like your house a lot, you could put as much as you can on the lot then copy the remaining rooms to a higher/lower floor.