We've all seen it: the run-down house on the lake that is sold, then torn down and rebuilt into something magnificent. Think Cinderella goes to the ball.

Rebuilding a lake home definitely has its advantages. "You can get the amenities people like: higher ceilings, heated basement floors, and a more energy-efficient friendly home. Some of those things you just can't do with a remodel," says Mark Oehlke, president of Mulberry Builders, who adds that many lake homes were built as cabins, so the infrastructure is just not there, particularly for those wanting to make it habitable year-round.

Then there's the financial - and hassle - factor. "The bottom line, from a square foot and timing basis, is that it's generally less expensive to build new," says Oehlke. "You can tear down the old one and have new footings and foundation done in a week."

Rebuilding is not always a slam-dunk decision, especially when you begin diving into lake zoning rules. To meet setback requirements, new homes often must be moved back much farther from the shoreline than where the original home or cabin stood. In addition, hard-cover requirements often limit the percentage of a lot that can be covered by a home, garage, even patios and driveways. While that might effectively guard against the creation of oversized "McMansions," it's often difficult to build within these pre-set parameters.

Many people decide to remodel instead of rebuild based on these restrictions, or because financially they need to take it slowly, perhaps remodeling in stages. Still others love the challenge of the remodel - the ability to tweak their home exactly to their liking. "Maybe it's just moving a wall," says Oehlke. "After you've lived in your home for a while, you know exactly what it needs - not necessarily a complete overhaul, maybe just a tune-up!"

This is the story of two very different lake home transformations. One involved planting brand-new roots, while the other blossomed from within.

Jeff and Lisa Schuler knew they had hit the jackpot when they bought their quaint summer place on Crookneck Lake, south of Motley. The sleepy two-bedroom cabin, situated on 50 feet of lakeshore, was the perfect size at the right price, ideally located less than two hours from their home in the Twin Cities.

"We were planning to have that cabin long-term," says Lisa Schuler. "It was a nice little place where we could spend summer weekends."

As their family expanded and one son turned into two, the cabin experienced its own growing pains. Over the years, lake water and run-off from rain and surrounding cabins had leached into the crawl space beneath their cabin, rotting the support beams. As the floors began to slant and cabinets sagged away from the walls, the Schulers pondered their options. Should they try to repair the damage or rebuild?

The decision was made for them during Labor Day weekend 2002, when they heard a support joist snap. "It sounded like a gun shot," Schuler recalls. At that moment, the rebuilding process began.

The couple quickly learned that tearing down and rebuilding on lakeshore property is not an easy feat. Because of lot-size limitations, they needed a variance from the county zoning commission to rebuild. Their proposal to build 50 feet from the shoreline, while 20 feet further back from the original structure, still fell short of strict zoning requirements.

"We didn't know what we would be dealing with," says Schuler, recalling the day they went in front of the county zoning commission to plead their case and present the architectural plans for their new lake home. "It felt a little like going to the principal's office!" Fortunately, the county board agreed it was in the best interest of the property and the lake to rebuild.

Schuler feels one reason they were approved is because they took time to learn what the zoning commission considered appropriate options, and they came armed with a desire to preserve the beauty and vitality of the lake. "We didn't go overboard with luxury," she says. Although they wanted to create a year-round lake home, they opted not to install a furnace or air conditioning, relying instead on more energy-efficient, allergy-free in-floor and sideboard heating and the fresh lake air for cooling. The home also remained dishwasher-free.

In a surprising twist of fate, they were even able to preserve the original cabin when a contractor offered to move the structure to a new lot a few miles away. His son and family now live in the cabin that provided years of memories for the young Schuler family.

Today it's a bit hard to remember how things once were. The modest lot is now home to a beautiful lake dwelling sided with Norway Pine logs. Landscaping adds to the appeal and also serves a purpose, ensuring water is funneled away from the home's foundation.

Inside, the rustic charm of the original cabin has been replaced by a light, airy cottage feel. The main floor, covered with tile flooring for easy maintenance, includes two bedrooms and a combination kitchen/living room with windows overlooking the lake, new kitchen appliances, silestone countertops and plenty of cabinet space.

The second-floor loft features an additional bathroom and large bedroom for guests. No space is unused, from the cushioned reading nook underneath the steps to the otherwise unused space under the slanted roofline, where the Schuler boys retreat to watch movies and play games.

Although the journey was at times rocky, Schuler is glad things worked out the way they did. Buying the cabin may have been a stroke of luck, but rebuilding it was most certainly a labor of love.

When Christopher Giles and Sara Affias heard about the home for sale on Lake Minnetonka's Forest Lake Bay, situated on a one-acre lot with 100 feet of lakeshore, they took a chance and made an offer. At $5,000 less than the asking price, with a contingency on the sale of their home in Wayzata, it was a long shot. Within a week, another couple countered with a stellar offer: asking price, cash and no contingency. Surprisingly, the seller declined, opting to accept the offer from Giles and Affias for one reason: they pledged not to tear down the home and rebuild. "He raised his family here. He loved it here," says Giles of the owner, who had occupied the home for 30 years. "He wanted someone who appreciated what it was - not someone who was going to tear it down."

Giles and Affias planned to remodel the rambler-style house, built in 1935 and renovated twice since. Avid cooks, they wanted a kitchen more suited for their passion. In addition, they planned to connect the cottage-style detached garage, which seemed quaint but became less- than-desirable after they moved into the house in December 2003.

What started as a modest plan to remodel quickly escalated into a major remodel after Giles and Affias met with an architect to draw up plans and began talking to contractors. Their investigation into prohibitive lakeshore zoning requirements confirmed that remodeling on the existing foundation would allow them to achieve their goals more cost-effectively than attempting to rebuild.

In August 2004, the couple moved out of the house and let Mulberry Builders begin knocking down walls. During the six- month renovation project, the 1,700 square-foot house grew to 3,400 square feet with the addition of two bedrooms, one bathroom and a mud room on the main floor, and a second-floor bonus room with three-quarter bath, which they added for resale value.

Although the original structure remained largely intact, builders tore out the existing galley kitchen, dining room, office space and two small bedrooms. According to Giles, every other room in the existing house was "touched" with new carpet, paint, trim and doors. The addition of American Black Walnut wood flooring throughout much of the house provided a seamless transition from old to new.

Perhaps most dramatic was the kitchen renovation. Giles recalls how builders "came in with a sawzall, cut through the roof and walls and chopped off the corner of the house. For that little piece, it was cheaper to tear it down," he explains.

The gourmet kitchen now features a subzero refrigerator and six-burner Wolf stove, and a center island topped with a beautiful slab of Van Gogh granite. For the countertops, the cooking couple chose durable, non-porous soapstone.

In January 2006, Giles and Affias moved back to a lake home transformed, yet not far from its humble roots. The final price tag for the remodel was more than double their initial budget, but a wise investment, according to Giles. "The way I look at it, we doubled our equity," he says.

As the self-described "lake people" head out on the water to boat or race sailboats, they know it was worth every penny.

By Nancy Pias