Possibly replace cot with large built in reading nook. This would provide storage on sides and give the privacy curtain somewhere to be when open. Bring sofa area out in front of tv area. Then being the dining area where the sofa is open part of dining wall if needed. This will give you enough space to extend the kitchen to door and still have mud room of sorts where dining room currently is. Upstairs looks ok consider looking at ship bathroom design. It is far more efficient than conventional. You must still follow local codes though.

Can you provide some photos of the exterior?

I agree that there is too much going on, however some of the suggestions are costly and in my opinion don't completely take care of the problems. I like the design approach it is fresh and updated. I agree that the chimney cap is out of proportion and just needs a simple band at the top. In order to make the exterior remain timeless over the years, Now Sit Down for a minute, I would make all of the exterior the white color. I know you love red however this will tie the different components of the architecture together more than any thing else. You can still have high gloss red doors and red tile pavers on the ground. It would also be very classy the use white tile in place of the brick look. You could even mix gloss white tiles with matt finish tiles to give an interesting sparkle when you ride by. I like the wrought iron upper railing, but the vertical blocking on the right side looks too heavy. So I would continue the same railing around the corner and back toward the house until it connects to the other balcony railing. This also ties the house together. It would look much more classic to not have a grid in the tall window and instead have a solid piece of glass down to the transom and then from there down be solid glass as well. Glass block in the courtyard column sections with back lights would look unbelievable. I would arch the closed in section on the second level as it would show up more there than the window being arched does, so save the money and don't arch that window. I would either hang a long contemporary light on the right elevation to dress it up or insert a long strip of glass block lighted from the interior to achieve the same effect. I charge for renderings, because I list the materials as well. Best, Leo Dowell Interiors.com

This is a most unusual and interesting structure. I would not have been sure it was a house from the picture. Pameladunson and I are in agreement that the strong visual difference between the rather utilitarian-looking "guard" at the roof and the more decorative fence/gate in front isn't visually pleasing. Both should be from the same architectural design family, although they need not be identical. The windows appear to have quite a bit of small architectural detail as best I can make out from the photo. The railing in front seems to have a scale that is better relative to those window details than does the "guard" at the roof, so I would probably opt for changing the roof "guard", not the railing in front. If do-able dollar-wise, It might be even better to remove both the roof "guard" and the railing/gate in front and design something new for these areas that is a good match with the most striking details elsewhere on the house.