NEW YORK (MONEY Magazine) - When extended families vacation together, space is paramount. With more elbows than room, the owners of a turn-of-the-century Lakeside, Mich. house looked to the other structure on their property: a 1920s English-style carriage house long used as the family's storage shed.

As children, the three siblings spent their summers in the main residence, a three-bedroom, two-bath house atop a Lake Michigan bluff. Now owners of the property -- a shared inheritance from their parents -- they wanted to accommodate all of their families for summers and holidays.

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Before: An unfinished store-room

After: An inviting book-lined living room

The carriage house, while an obvious choice for more room, wasn't an easy fix. Its main floor offered two garages and a bare-bones kitchenette, the upstairs rooms were cramped, and without heat it was livable only in summer.

So their architects converted one of the car bays into a living room, souped up the kitchen, added a bathroom and enclosed the screen porch for a dining room. A dormer attached to the second floor transformed the upstairs, and a heating system was cleverly disguised within the original features of the cottage.

The coach house, including the garage (now a living room), needed insulation ($2,800) plus plumbing ($11,000), electrical ($6,500) and heating and cooling ($7,000). Ducts were hidden behind a false ceiling, between exposed beams.

An interior wall was built in front of the living room garage doors, and an 11-foot run of shelves and cabinets installed ($3,000). Aluminum-clad french doors ($2,100) slide open to the side yard and are flanked by two casement windows ($1,900). Cork was laid over a concrete subfloor ($6,500).

A 34-foot dormer added to the rear ($30,000) raised the height of the sloped walls to eight feet from two, making the sleeping spaces big enough for grown-ups. There's a 170-square-foot sitting area between the two 14-foot-by-11-foot bedrooms. All second-story rooms have their original pine floors.

The goal was to keep the character of the carriage house, so the wood garage doors in the front of the structure weren't removed -- and still open. A total of 32 new windows ($19,500) match the style of the original casements. Although replacing windows required some new shingles, carpenters were able to reuse most of the original 80-year-old material, saving the owners $10,000. Once all the shingles were up, the building was power-washed and re-stained.

Now the 1,485-square-foot space easily sleeps six. But some things never change: The remaining garage space is still a storeroom.

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