In a flat market, a little patience and lots of research win the day.

Investing in real estate can be far more daunting than investing in other asset classes because of the sums of money involved. You can get into the sharemarket for $2000. If you lose that $2000, it’s a lot easier to deal with than if you forfeit $100,000 in lost capital growth because you bought a dud property.

There is no such thing as a risk-free investment but valuable investing opportunities certainly arise in periods of greater affordability.

These opportunities rear up when markets are scraping along the bottom of the property cycle, and that’s what most real estate markets in Australia have been doing since 2010.

In a flat market, investment-grade properties – those in good streets and close to amenities – can sell for 5 per cent to 10 per cent less than what they might have fetched a few years earlier.

To get value, though, you need to research meticulously and have a little patience.

David Morrell, a buyer’s advocate with Morrell & Koren, says buyers often lack patience and can overpay because of it.

”Most people let their emotions rule their decision making,” Mr Morrell says. ”But if you have got patience and knowledge, you will do well out of property.”

Knowledge can give rise to lucky breaks. At last weekend’s Home Buyer & Property Investor Show in Melbourne, adviser Margaret Lomas, of Destiny Financial Solutions, highlighted her favoured locations for investors, including the Hunter Valley in NSW, Bendigo and Ballarat in Victoria, and Mackay in Queensland.

Ms Lomas prefers regional centres over inner-city areas and says it’s easy to buy in so-called hot spots. What is harder to achieve, she says, is buying property in ”warm spots” – areas that are yet to see price growth but are likely to.

Ms Lomas urges investors to use many resources for buying property – the internet, real estate agents, newspapers and economic data. By buying property widely and in states where investors do not live, people quickly learn not to let their emotions interfere with investment decisions, she adds.

The two-year slump in residential markets has led to a 5 per cent-10 per cent easing in median prices in most cities and regions. Monique Sasson Wakelin, of Wakelin Property Advisory, says values in Australia are high compared with other Western countries.

”The opportunities are there for the taking,” she says. ”A 5 [per cent] to 10 per cent reduction on an average-priced property that costs $600,000 is quite a big difference – it would have cost $60,000 more two or three years ago.”

Buying well is often in the timing. Little wonder investors are trying to figure out whether specific markets have hit bottom or have further to fall.

Mr Morrell specialises in high-end real estate and says it’s possible that improved opportunities to buy $1.5 million-plus properties might be open to buyers who wait.

”We are buying [auctioned properties] for less than what they have been passed in for on a vendor bid,” he says.

Properties below $600,000 mightn’t follow the same trajectory, though. With cuts to interest rates, clearance rates tracking upwards and analyst reports of house price growth, the window for value buying could be closing.

Ms Wakelin says the market is taking a breather. ”Everyone tells the bad news and that’s OK because the market is not rosy,” she says. ”But nobody is telling the story of how much value there is to be had out there if you know what you’re doing.”

Posted by Chris Tolhurst – Domain (The Age) on 13th October, 2012