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The project begins with a simple drawing of the space to map out the floor plan. If you want to get more sophisticated, you may want to try some of the room-planning software programs available for personal computers. These allow you to quickly create three-dimensional computer simulations of the room you're planning.
With a solid plan formulated, prep work for the remodel can begin. Remove the closet doors. Paint the top half of the walls. It is not necessary to paint the entire walls since wood paneling will later cover the lower portion of them.
Select the wood paneling to go on the walls. This example uses 4'x8' plywood panels with vertical grooves. Pre-stain the panels prior to installation. The paneling provides the room with a greater feeling of height, and a durable surface suitable for the kind of wear that kids can create. Taking into account the existing 3-1/4" inch base molding and 2" border, make vertical cuts in the panels as needed. Take into account the existing electrical outlets and any unusual angles of the room.
To accommodate the existing outlets, trace an outlet cover-plate onto cardboard to make a template. Then cut out the template using a utility knife, and then trace onto the paneling at the appropriate measured locations. The holes for the outlets should be cut in the paneling using a jigsaw.
Fasten the panels to the existing drywall using both adhesive and finish nails (Image 1). Place the nails at 2-foot intervals. Use a nail-set and wood putty to conceal the nail heads. Cut corner molding to size and install using finish nails. Install trim molding around the edge of the windows (Image 2).
Install the molding at the top of the panels. Cut the molding into 18-inch segments and install all the way around the room. In this example, the height of the molding was 8-1/2 feet -- 6 inches below the ceiling.