Marcelo Cataldo and his wife, Pei-Chi Su, a costume designer, laughingly refer to their 19th-century townhouse in Lawrenceville as their "apartment house."

That's because all they had to do when they bought it last April from Catherine McConnell was hang pictures and buy appliances that fit its clean, modern look. They certainly wouldn't have said that if they had seen it three years before, when Ms. McConnell bought it at foreclosure for the grand sum of $23,000.

"It was pretty grim," says Ms. McConnell, a TV and film set designer turned Realtor and remodeler. "Everything was just completely falling apart. I knew someone needed to buy it and do the right thing for the neighborhood."

She and partner Mark Knobil certainly succeeded in that effort. The house ended up on the Lawrenceville House Tour and its reconstruction earned Ms. McConnell and Mr. Knobil a runner-up award in the Post-Gazette's second annual Renovation Inspiration Contest, large project category.

The house, which dates to 1886, was uninhabitable and its exterior was covered with Insulbrick. Tiny, inappropriate modern windows had long ago replaced the original double-hungs. But Ms. McConnell saw potential. She had developed her artistic eye as a set designer for the film and TV industry (she was art director for "Mister Rogers' Neighborhood" for almost a decade). She had also renovated another dilapidated Victorian on the same street.

Ms. McConnell and Mr. Knobil, a documentary cinematographer, spent two years and tens of thousands of dollars gutting the interior, removing walls, adding windows and skylights and exposing ceiling beams on the second floor to create a loft that is as light and bright as the rest of the house. It's so sunny and comfortable that on most days, Mr. Cataldo and his wife don't even have to turn on the lights.

"When we first learned it was 100-plus years old, it was like, ugh!" he says. "Then you come inside and those feelings go away."

Money -- or the lack thereof -- often determines the direction a renovation project takes. In Ms. McConnell and Mr. Knobil's case, however, the home's small size proved its biggest challenge: It is just 19 feet wide and two rooms deep. With no budget for an addition, the couple decided to instead create the illusion of space by removing the walls on either side of the staircase separating the living room from the kitchen. They also installed larger, period-appropriate Andersen wood windows on the facade, added two sliding French doors on a side wall and removed the suspended ceiling, revealing the original 14-foot ceilings.

"We thought we could make it feel bigger is there was more vertical head room," explains Ms. McConnell, who lives in Polish Hill.

The floors were another matter. Determined to salvage as much of the home's original character as possible, the pair spent weeks sanding layers of glued-on tar paper and vinyl off the wide-width pine floors, repairing damaged sections with planks from the attic. They exposed a brick wall in the kitchen, which has light maple cabinetry, laminated countertops trimmed in cherry, a translucent glass backsplash and -- here's a creative idea -- wall-mounted spice racks made from framed steel table mats and magnetic tins from IKEA.

The second-floor bath is a delightful marriage of old and new. Here, new glass French doors open onto a small bath with white beadboard, exposed beams and tubular skylights. Even more distinctive is the master bedroom, which overlooks 41st Street. To make it feel more spacious, the couple removed part of the ceiling to expose the original ceiling joists. They also added a pair of closets with louvered doors because, as Ms. McConnell points out, "even small houses need big closets."

Removing a section of the ceiling created a balcony off the attic loft. Maintaining the house's industrial aesthetic, contractor Frank Leonardi installed aluminum electrical conduit as a railing. Used by Mr. Cataldo and his wife as a studio, this airy space is as practical as it is pretty, holding not only a pair of desks and plenty of storage but also a pair of skylights through which the top of the U.S. Steel Tower, Downtown, is visible above the rooftops. The walls are dotted with Ms. Su's whispery drawings of costumes for theatrical productions.

Knowing that nothing says "welcome" like a pretty front door, Ms. McConnell took special care when revamping the entrance. Using an antique door frame she discovered at Arsenal Antiques on Butler Street as a jumping off point, she had Mr. Leonardi install a paneled door from Straits Door Co. that's "pretty close" to what would have originally been there.

Ms. McConnell readily admits the two-year renovation was a tough one. She barely broke even on the project.

"More than once, I wished I hadn't undertaken it," she says with a laugh.

Maybe that's why Mr. Cataldo and his wife, who spent almost a year wading through a tangle of liens in order to purchase the empty lot next door, will take care of the finishing touches. They're thinking of creating a large side garden or maybe a deck that complements the one they built on the covered back porch. Lawrenceville feels like home, Mr. Cataldo says.

"This is a great neighborhood."