Where: Elwood, Vic

What: Rebuilt family home

In February 2011, Jo Twaddell and Toby McIntyre found themselves knee deep in water. The Elwood Canal had flooded into neighbouring streets, and their much loved little 1940s house was flooded.

After the water subsided, they spent months trying to dry the place out, but soon admitted defeat and decided to rebuild. They spent three years living elsewhere while their new home was built - 85 centimetres higher than the old house.

The pair worked with local architect Sean Van Der Velden of SVDV Architects, also enlisting the help of their friend Leigh Ellwood, of Leigh Ellwood Interiors. Another friend, landscape designer Kate Patterson, helped with exterior landscaping. The new house has been thoughtfully designed, with a subtle nod to the former 1940s home.

This is a home designed for family functionality. "The hallway is long and wide for our three boys to burn some energy," says Twaddell. "It's not particularly big, but the spaces that Sean designed for us are all so usable. Nothing is precious, the brick walls are forgiving to knocks and bumps so the kids can play freely."

Tongue-and-groove timber wall panelling, Victorian ash rafters and solid American oak floorboards all lend a robust texture to the interiors.

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Twaddell is an optometrist - her business, WINK in Elwood, is a favourite among lens-wearing locals. Through her shop, she has built an incredible community of creative clients and friends, and it's through this network that many of Twaddell's favourite artworks and household items have been found.

"I meet many wonderfully creative people when they come to WINK for their glasses, and I've made a few contra deals," she says.

"For instance, my amazingly talented friend Emily Bush made the lightbox in the living area." Similarly, Melbourne artist Miranda Skoczek (Twaddell's "favourite glasses wearer of all time") is represented here, as is sculptor Lisa Roet.

Being a local retailer herself, Twaddell likes to shop locally. Most of her soft furnishings and ceramics are from South Village Trading in Elwood, much of her kids stuff is from local store Naughts and Crosses, while other accessories are from The Grumpy Swimmer.

Having to demolish and rebuild their much-loved family home, Twaddell and McIntyre have a unique idea of what it is that really makes a house a home, and a refreshingly pragmatic outlook.

"I guess in hindsight it's a good thing the flood made us rebuild," Twaddell says. "You spend so much time at home while the kids are young, and it's just such a functional house. I love that I live here."

The Design Files guide to decorating for kids

Kids' rooms are the most fun decorating projects because they never worry about what the neighbours think, or resale value.

• Colourful linen is a no-brainer: try Kip & Co (kipandco.com.au) for the bedding and accessories, and op shops or Etsy for Nana-tastic crocheted blankets and lovely old-fashioned knitted toys.
• If there's one room you can enlist bold colours, it's where the kids are. If you lack confidence, start with a small area, such as a bedroom door, or just one wall.
• When it comes to posters and artwork, more is more. Go floor to ceiling for maximum effect.
• Channel your inner 10-year-old - let go of your inhibition. It's just a bedroom.