In a neighborhood located just a few blocks from Lake El Estero, the Naval Postgraduate School, and downtown Monterey, sits Gary and Bebe Cottons’ two-bedroom bungalow. It’s so cute, that people walking by often slow down to look through the vine-covered archway. Then they do a double-take at the barking Christmas wreaths on the Cottons’ gate: their two dogs, Sadie and Jack, pop their heads through a hole in the fence ringed with wreaths.

It’s the combination of cuteness and whimsy that keeps the house interesting.

Inside, in a tribute to the Wild West, Bebe mounted a cattle skull in the living room, and painted the walls in shades of the desert. Dusty red, sage green, and sandy beige liven up the room in a subtle manner. A new plastered fireplace replaces the old brick one.

“I’m not scared of color,” Bebe says. “I wanted it to be alive.”

So while the home maintains it’s ’40s roots, it definitely has been brought into the present.

“We literally touched every inch of this house,” Bebe says. “We started in one corner and just kept going.”

With too many doors blocking off the flow of the house, Gary decided to remove the non-essential ones and replace them with plastered archways. The Cottons also ripped out kitchen linoleum and replaced it with a black and mahogany-colored checkerboard pattern. An original pull-out ironing board remains in the laundry room off the kitchen. New appliances and cabinets still fit with the original style.

“We wanted to keep the character, and not make it like a new house,” Bebe says.

Every inch of kitchen space is utilized, whether it be for a pull-out spice rack or a knife drawer.

“We met in the kitchen of Roy’s, where we were both chefs,” Bebe explains. “So we maximized the kitchen.”

Gary, who also used to work for Indian motorcycles, did all of the work himself, with the help of Bebe’s brother, a contractor.

In the master bedroom, a brownish finish on the walls was applied with rolled rags, creating a finish that resembles suede.

Bebe shows off one of many closets in the home, that all have built-in shelving for organizing to perfection. Upstairs, in a full attic, she keeps her crafts projects out of the way.

Behind the house, a large green yard that used to have only dead grass leads to a hot tub underneath a flower-covered arbor.

“We’re in the sunbelt here,” Bebe says. “With the windbreak from the garage it gets to be 75 degrees back here.”

The garage, which is detached from the house, shares a wall and a driveway with the next-door neighbor.

“It was two sisters who lived in these two houses in 1945,” Gary explains. “I painted our side a different color than the neighbors to give it a little bit of separation.”

The Cottons, who are pursuing even greater heat with a move to Arizona, are ready for their next project.

“It was fun,” Gary grins. “We’ll do it again.”

Price: $599,900. 1251 7th St., Monterey. Contact Becky Jones of Greg Shankle Real Estate at 372-5306.