between 10% and 15% annually. Those were the days when you could pull a little equity out of

your house and send a kid to college. Or, even better, finance a pretty great retirement. It

seems like only yesterday when most Americans sat comfortably in their living rooms knowing

that their home was a stable, sound investment.

Needless to say, times have changed. Property values have plummeted, and more and more

homeowners find themselves faced with an upside-down mortgage ? a loan with a balance that

exceeds the value of the home.

But all's not lost: with home values so low, it's never been a better time to improve your

property. When prices start to rise in the coming years, your home will be that much more

valuable when you decide it's time to move on. Think of your home as your investment

portfolio; with prices low, now is the perfect time to add some gems to the mix, which will

only increase your portfolio's performance once the market surges again.

More is definitely not better for many people, a house is the single most expensive item

they'll ever purchase, and a remodel or improvement is, in and of itself, a smart way to

protect the investment they've already made in their home. But exercise restraint with your

plan. Very often, people who decide to undertake a major renovation of their home think more

is better. Nothing could be further from the truth. Over-developing your property so that it

no longer seems to fit in with the neighborhood profile is a huge ? and avoidable ? mistake.

If your finished renovation makes your house look like a 19th-century Bavarian castle, and

your neighborhood is filled with adorable, postwar Cape Cods, you'll probably have lots of

problems recouping the investment you've already made.

Okay, let's renovate. Now what?

You've decided to take the plunge and renovate. A key step to this process is soliciting and

then comparing bids from several contractors. Contractors compete directly for your

business, but you have to be careful. Under no circumstances should you automatically accept

the lowest bid; even though that contractor might be offering you the cheapest deal, your

renovation might be done with correspondingly cheap materials, which will ultimately create

expensive problems down the road. Never forget that what a contractor is offering you is a

service, not a product. If your contractor wants to do a quick job on the cheap, you'll be

sorry.

Just like you should never pour thousands of dollars into a mutual fund you haven't

researched thoroughly, you shouldn't invest a dime in a renovation without researching your

contractor and his bid from stem to stern. When you feel like you have enough information to

make an informed decision about the contractor's bid, start your research from scratch and

make sure you haven't missed anything. This is the single most important step in protecting

your investment during a renovation.

Insurance concerns.

Of course you have home insurance, but a renovation is a special circumstance that has a

host of issues to bear in mind. Your contractor should carry a commercial general liability

policy, or CGL insurance. This covers issues like bodily injury that results in actual

physical damage, property damage or loss, and personal injury. Make sure you require your

contractor to carry an insurance policy that's at least twice the value of your home after

the renovation is complete. Check the certificate of insurance and make sure that the policy

is underwritten on an occurrence basis, which allows you to make a claim after the

renovation is done and the contractor's policy has expired. It's also important that you and

your home address be listed clearly and correctly as both a ?certificate holder? and as

?additional insured.? If you have any doubts about your contractor's CGL policy, write or

call the insurance agent listed on the certificate and ask for more details.

There's no doubt that many people are anxious about homeownership right now. But, with some

careful planning and a healthy, long-term perspective, protecting the investment you've made

in your home can be a simple, straightforward process. Do your math, do your research, and

you're sure to come out ahead in the long run.