Q: How do I know when I have made profit?

The third means of making money from property is profit. Whilst in general terms profit can refer to any money made, it does have a specific meaning which is money made as a result of discount purchasing or renovations. Profit in this sense is the money made by buying and selling a property, not including capital appreciation. This shows that you can make money from property even if prices in the market are not rising. As an example, if you were able to buy a property for 10% under market value and then sell the property at market value, you will have made a profit, even if the market value has not risen.

There are two basic strategies for generating profit from property. The first is discount buying and second is adding value. It is possible to buy property below market value when buying off-plan as developers often give genuine discounts to get early sales before construction starts. Bulk buyers can also buy below market value as they are likely to negotiate a discount for buying a number of properties in one development. However, these bulk discounts can also be available to people even when they only buy single property. This is usually achieved through bulk buying as an organised group. This could be as informal as getting together with some friends to buy a number of properties, or could involve joining a property club or syndicate where the club arranges bulk buy discounts on behalf of its members. Buying through clubs like this can prove very profitable, as long as the discounts being offered are genuine. Before buying through a club, check that the savings stack up as you will usually pay some form of fee for the privilege of receiving the discount.

Profiting by adding value to a property usually involves renovation and modernisation. This is a good strategy in your home market, but very difficult or organise when the property is abroad. Unless you are doing it on a large scale and therefore able to employ a turnkey project management company, it is best to steer clear of this approach to international property investment.