By Property Soul (guest contributor)

150512 ImagesI spent my Labor Day holiday spring cleaning my wardrobe. How hard can it be? Well, any lady will tell you that this is a labor-intensive and mentally-draining chore, with lots of surprises and heartbreaks along the way.It took me almost two days to complete the job, after endless rounds of repeating three tasks:

1. Keep pieces that are still in favor

To maximize the chance of wearing the good ones, mix and match different pieces to try various combinations and create new outfits.

2. Put aside pieces that need some work

Many pieces need some work before they can be worn again, like cleaning or ironing, sewing missing buttons, fixing damage, tailoring to make them fit, etc.

3. Throwing away pieces that I will never wear again

These are pieces that haven’t been worn for the past two years. Some are old clothes that have seen better days and are now ready for retirement. Others are simply not trendy anymore.

For new clothes that are used just once or even brand new, the strong feelings of guilt and regret come every time I decide to throw them away.

There are three common reasons why I end up buying the wrong thing:

1. Buying on a whim

It looks nice in the catalog and fashion magazine. Or I can imagine myself looking fabulous in it.

2. Buying under pressure

There is peer pressure when a shopping companion tells me that it looks nice on me. A few times I fell for the flattery of a salesman who is full of praise when I step out of the fitting room.

3. Buying for the future

It is tempting to buy now and save it for a future occasion. And I am not the only lady who tries to buy clothes one size smaller, thinking that one day I can fit in. But somehow that day never comes.

Who are the third parties reaping the benefits from my silly mistakes? They are my domestic helper and my elder girl who turns ten next month. They are excited by this treasure hunt game to find gems from the pile of my discarded clothes.

Property spring cleaning

During the previous property bear markets, many investors had to deal with the long overdue task of spring cleaning their property portfolio.

How painful is the process? Well, any owner selling at a loss can tell you that this is a time-consuming and heart-wrenching chore, with lots of headaches and disappointments along the way.

It can take months or even years to decide what to do, though it will still consist of the same three steps:

1. Keep the good quality properties

These are the properties that still have positive cashflow during bad times. Measures are taken to minimize costs and maximize returns, such as refinancing to get a lower interest rate, renting rooms rather than the whole unit, etc.

2. Fix the properties that need some work

In a soft rental market, no one will rent a place that needs repair. To secure good tenants in a competitive market, it’s time to touch-up old apartments and renovate rundown houses.

3. Dump the properties that have underperformed

For properties that have low or negative net rental returns, it make little sense for owners to continue subsidizing tenants to stay there. Owners have to cut loss in time before their values drop further.

There are three common reasons why investors end up buying the wrong thing:

1. Buying on a whim

The project looks nice in the advertisement and the showflat. Everyone is buying now and you can’t afford to lose out in the property game.

2. Buying under pressure

All your friends, colleagues and relatives stay in a condo. It is such an embarrassment telling people that you are living in an HDB flat. Noises from every direction tell you to go for it. And you find it very difficult to say ‘no’ to that persuasive property agent.

3. Buying for the future

It is tempting to buy now and pay later. Buying a project still under construction means that you only have to pay years from now. By then you will have enough savings and a higher salary to support that pricey property.

Who are the third parties reaping the benefits from your silly mistakes? They are the bargain hunters or value investors who have been waiting for this day to come. They are excited by your cutting loss and are busy finding gems among the bulk of fire sales. With the ‘new’ properties in their arms, they smile and hope there are more to come.

Lessons learned on avoiding buying the wrong property

1. The most terrible feeling is the realization that you have spent a lot of money buying the wrong thing.

2. Good taste and good insight often have nothing to do with money. Having money and knowing how to pick the good stuff are two different things.

3. Resist the temptation to buy something the day you first see it. Put it on hold for a few days in order to minimize the chance of regretting the purchase later.

4. Buy only what fits your budget now, not what is going to fit you in the future.

5. You can’t make choices based on what everyone says is good. Don’t imitate others. Don’t follow the trend. Find your own style.

By guest contributor Property Soul, a successful property investor, blogger, and author of the No B.S. Guide to Property Investment.

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