(MONEY Magazine) - When Maureen and Kevin Mirabile bought their Montauk, N.Y. retreat, it was a two-family home with upstairs and downstairs apartments, each with a prefab kitchen. Though built on a hill, it took no advantage of the water views. So after gutting the 3,140-square-foot house, they rebuilt with the view in mind, bumping out the wall facing the water and adding windows. They put the space where the couple and their three kids would spend the most time--an airy kitchen, living room and dining room--on the second floor, with a mahogany deck adjoining it. "It's our upside-down house," says Maureen of the now 3,400-square-foot, five-bedroom home. "Making the kitchen blend into the family room, which opens onto the deck, is perfect for a big family and entertaining," says real estate agent Peter Joyce, who was also the Mirabiles' contractor.

Open for pleasure Laminate cabinets were replaced with semicustom maple ones ($39,200). The cherry island ($5,300) visually divides the work space from the dining area. A half wall housing a porcelain sink ($800) and a beverage cooler ($856) keeps the kitchen apart yet open. Best savings? GE Monogram appliances: The $4,200 gas range with electric oven was $2,000 less than a similar Viking. Best splurge? A backsplash of handmade tiles ($1,043).

BOUGHT IN 2002 FOR $785K

RENOVATION COSTS $500K

WHERE DID IT GO? Plumbing, electric and AC ($78,000), a roof ($50,000), three bathrooms ($50,000) and 36 wind-resistant windows ($35,000)

MARKET VALUE TODAY $2.4 million

WORTH IT? "Montauk prices have skyrocketed in the past year and a half," says agent Joyce. For this house, he adds, "the biggest selling point is the view."