So, you finally decide to set up a villa rental in Bali or even already own one! However, managing a villa comes with various expenses that you might not have considered. In this article, we'll outline the most common villa expenses in Bali rental to help you prepare and budget effectively. Let's dive in!
Owning a villa in Bali requires regular maintenance to ensure it remains in excellent condition. Maintenance expenses may include repairs, refurbishments, landscaping, pool cleaning, and pest control. Setting aside a budget for maintenance is crucial to upholding the quality and attractiveness of your property.
You must set aside your profit from the Bali rental villa for maintenance.
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Saving a part of your rental revenue as a sinking fund for maintenance is the most common practice for villa owner who rents out their property. For routine maintenance, we advise to set the budget between 2-4% of your rental annual revenue.
Hiring employees for your villa rental is common in Bali. This expense covers salaries for housekeepers, gardeners, security personnel, and other staff members. Remember to comply with local labor laws and provide fair wages to your employees.
Indonesia has what's called UMK (Upah Minimum Kabupaten or regency minimum wage), which refers to the minimum monthly wage regulation that employers must adhere to. It is calculated based on the minimum costs that are needed to cover a minimum living standard for an individual in the region. So far, the UMK has always risen following the annual rate of inflation and rising prices of goods in the market.
Investing in employees by paying them well can get your rental villa in Bali goes far.
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Currently, in 2023, Badung Regency holds the highest minimum wage in Bali, with 3,1 million IDR per month which includes popular areas like Kuta, Seminyak, Canggu, Pererenan, Bukit Peninsula, and more. Notable areas outside of Badung Regency include Ubud, which is located in Gianyar Regency. You can check here for more info about UMK in Bali each year.
Besides the UMK, employers should also ensure that employees are covered by insurance, which must be paid through the government program called BPJS. BPJS payments are separate from the UMK and represent the minimum compensation employees should receive. Therefore, it's essential to include insurance payments in the overall salary package.
If you want to know more about what employers should or should not do in Indonesia, you can check more here.
Electricity costs can be significant, especially if your villa has a large power source and offers various amenities like air conditioning, heating, or a smart home system. Implementing energy-efficient measures and being mindful of electricity usage can help reduce this expense.
Offering reliable and high-speed internet is a must for daily living in this day and age. So, unless you try to sell your villa as a hermit retreat, you should factor the expense of internet services into your overall operating costs.
Having an internet connection in a villa is essential in today's times.
Photo by PhotoAttractive from Getty Images Signature
One of the most popular internet service providers for villas or hotels in Bali is Global Xtreme & CBN. The lite package starts from 250K IDR while the ultra high speed at 1 million IDR per month, where you'll get a guaranteed 100 Mbps internet speed. Custom packages are also available if you need even faster speeds.
In Bali, contributing to the local Banjar (community association) is customary. Besides further ensuring security around the neighborhood, the Banjar fee also supports various community initiatives, including local events and ceremonies.
Pecalang from a Banjar provides added security to the neighborhood.
Photo by Sue in Flickr
Read more: What is Banjar in Bali?
The fee of each Banjar varies, depending on each rule and policy of the local neighborhood. For a villa that is used as rental accommodation, the local Banjar will charge you, the rental business owner, between 50k IDR to 250k IDR a month.
In Bali, the usual practice for bin collection involves a pickup service facilitated by dump trucks, following specific schedules. These trucks collect garbage directly from in front of the villa, maintaining a routine. It's important to be aware that during significant Hindu religious ceremonies like Galungan or Nyepi, the garbage pickup service may be temporarily halted, as the service providers participate in the ceremonies.
Eco-friendly waste management can be a deal breaker for your villa rental in Bali.
Photo by Eco-Bali
On the other hand, the rising trend of eco-friendly practices in waste management is significantly impacting the villa rental landscape. Responsible waste management and recycling have taken center stage, and this eco-friendliness adds considerable value to your rental villa. In fact, for some prospective tenants, your villa's commitment to eco-conscious practices can even be a deciding factor. Exploring the costs associated with eco-conscious bin collection services not only demonstrates your commitment to minimizing your villa's environmental footprint but also appeals to environmentally-conscious renters.
If you’re interested in getting the service, you can connect to one of them here.
As a villa owner, you are subject to taxes on the revenue generated from rental bookings. Consult with a tax professional to understand your tax obligations and ensure compliance with local tax laws.
Rental villas in Bali are subject to taxes.
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Land taxes usually cost way less than income tax. When you lease land in Bali, in most cases you pay the land taxes during the period of lease.
Owning and managing a villa rental in Bali can be a rewarding venture, but it requires careful financial planning. By acknowledging and accounting for the various expenses outlined in this article, you can run a successful and sustainable villa rental business in Bali.
Disclaimer: The information presented in this article is intended for informational purposes only. It should not be considered as a substitute for professional advice or used as a basis for making legal, financial, or investment decisions. Readers are encouraged to seek guidance from qualified experts or professionals before taking any actions based on the content provided in this article. The author and publisher do not accept any responsibility for any consequences or losses resulting from the use of this information