Investing in real estate is a rewarding experience and you can get the most out of it by doing it the right way. Property investment in Bali is still a profitable venture despite the pandemic when you take into account the high demand that is being held up by the border closure. On the contrary, the pandemic presents a golden opportunity to buy a property in Bali as you will be prepared to satisfy that demand once international travel is no longer restricted.
Whether you’re a first time buyer or expanding your portfolio, these tips can help maximising the return on your investment:
Buying freehold properties using the nominee arrangement offers no legal protection and is not a recommended practice. The lease duration for leasehold properties in Bali is typically between 25 to 35 years, which is sufficient for long term capital growth especially if you invest in a good location.
While establishing a foreign investment company (locally known as PT PMA) is the safest method for foreign ownership of properties, buying freehold villa or land with a PT PMA is recommended for medium to large scale investments as there is a minimum amount of capital investment that must be met.
Invest in emerging areas
Buy property in up-and-coming regions like Canggu while there’s still a lot of opportunities, especially in the Berawa neighborhood where all the buzz is happening right now and the property value is on the rise. Saturated areas such as Seminyak and Kuta offer little room for new developments while property prices are considerably higher. The rental demand growth in emerging areas is also stronger than in developed areas as seen in the last 3 years, which is highly advantageous if you plan to invest in short term rentals.
Don’t overlook less developed regions near emerging areas, but rather invest in those regions early on. Pererenan, for example, is not as developed as its neighbor Canggu just yet but it’s a promising location both for long term investments and short term rentals.
Get to know the rental market
This is particularly crucial if you wish to sublease your property either annually or daily, as the market condition of each region varies from time to time. Being well informed on the latest trends, including any changes in the average rent price and demand will allow you to recognize the current state and potential of the market, enables you to invest in the right place and property. Even if you’re looking for a home to settle in, it is very useful to understand the property’s rental potential as you may consider renting it out for cash flow while you’re on vacation overseas or returning to your home country.
Villa revenue is determined by several factors such as number of bedrooms, design, location. Revenue of different properties with similar specifications can easily vary, and you can achieve double the amount if you fit the right demand in the right area. Supply and demand for specific amounts of bedrooms also vary depending on the region’s market. For daily rentals, good management is essential as this will affect guest satisfaction and reviews. For long term rentals, proximity to international schools or coworking spaces will make your property more appealing to tenants with specific needs.
This is one of the primary reasons why it’s important to work with local licensed real estate agencies and property management companies, and we’ll talk about it more later on.
Consider buying off-plan properties
Off-plan properties are usually priced lower than the market value, and you don’t have to worry about maintenance costs during low occupancy at times like this. Buying off-plan may be a cheaper option than a fix-and-flip as renovation costs can inflate easily if an existing property has hidden costs, which is something that you must beware of when browsing bargain properties. In addition, you might find off-plan properties offered with guaranteed ROI.
Investing in large-scale off-plan developments as early as possible is a wise move, as it allows you to secure the best units available before reaching their peak competitive pricing. Most of the developments increase their price along with the construction progress, and buying an off-plan villa before breaking ground will be cheaper than when it’s at 30% completion.
Appoint a reliable property manager
Seek a property manager who has a good network of tradespeople that can help with the maintenance of your property, so you won’t have to look hard for housekeepers, gardeners, plumbers, etc. Hiring a manager is essential for rental properties even if you don’t live far from your investment because you can divide the workload accordingly or delegate it entirely for a hassle free operation, which is a lifesaver if you’re running multiple rentals at once.
Guest satisfaction is instrumental in attracting customers, because online reviews greatly affect a prospective customer’s decision to book your property or not. With that said, working with a good management company is not only helpful in maintaining your property but also in producing high numbers and quality reviews.
Consult with local real estate agents
Whether you want to buy through them or need some information, always seek the help of a licensed agent. Local agents are the best source because they can provide reliable and up to date information including the aforementioned insights into the property market, such as the rental outlook of a region and even the rental forecast of a particular property. Besides, the agent may already have listings that perfectly suit your budget and preferences, saving you from the tedious work of searching through Bali’s bustling streets.
Don’t bother working with unlicensed freelance agents as they do not have the legal authority to broker real estate transactions. Even worse, you might get caught in scams such as overpaying the property or the agent’s commission.
At the end of the day, you can’t really go wrong with your investment decision as long as you do extensive research beforehand. When you’re ready to invest or would like to browse what kind of opportunities available today, feel free to visit our catalog of villas, land, and properties available for sale in various regions of Bali. For more information on real estate investment in Bali or property related matters, please do not hesitate to contact us.