Astronomy is one of the few sciences where the data (star-light) can be seen by all. Yet, there is a disconnect between a typical undergraduate lecture and, for example, where a planet may be in the sky and how to observe it. With the advent of moderate cost, high-quality 'back-garden' astronomy, and standard computers powerful enough to produce original research, we show it is possible to build a small observatory capable of actual astrophysical research for a modest budget [approximately equal to]£30 000. We detail the iterative process of planning, funding, results and student-projects, that we followed over 4 years from a Raspberry Pi camera and home-owned telescope, to a permanent roll-top observatory with two fully automated telescope systems capable of undergraduate use and astronomical science. We report on projects ranging from early-years projects based on observational planning, data analysis and some restricted actual observations, to more open-ended final-year projects to observe, e.g. planetary transits, variable stars or high-resolution planetary imaging. We hope this work may act as a blue-print or encourage and aid other small to medium sized higher-education institutions and astrophysics groups to also develop their own undergraduate observatory.