i have a split roll off roof observatory in the back field -- split because a single section would be very heavy. schematics, design details, photos and a blog narrative of the construction are linked here: http://www.handprint...STRO/index.html
i wouldn't recommend building the observatory anywhere near your residence structures if you can avoid it. if you can't then the garage is probably the best option, assuming it has no roof insulation and (ideally) something like a white quartz pebble roof.
the observatory area itself can be astonishingly small, if it's well designed -- dennis de cicco built a "doghouse" observatory while waiting to build his two story astronomy god observational multiplex. he liked the dinky one so much he was reluctant to tear it down.