Why is it better to rent a long term villa in bali

Bali Property Advice August 07, 2020

Many tourists come to Bali most of the time for a long time because there is so much to discover in here, from partying in the club every night, candlelight dinner on the beach to outdoor activities such as rafting, paintball, hiking Mount Agung and even spiritual activity like yoga. Renting is one of the easiest ways to find accommodation in Bali when you want to be in a villa with a pool to feel at home. However, the duration of the rental has a great influence on its price.

Indeed, on average for a night in a villa the best price is around IDR 700K-1400K for 1 bedroom, what if you decide to stay for 2 weeks? This can be relatively expensive compared to monthly rental.
While in the opposite case a monthly rental is estimated at IDR 17-25 million for 1-2 bedrooms, which is largely more go. It is therefore important to reconsider the issue of the rental period when you want to rent because the duration is a very important factor to take into account at the budget level.

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Invest in Bali with Budget 150K to 650K USD

Invest in Bali October 10, 2023

What You Can Invest in Bali with a Budget $150,000 to $650,000

Investing in Bali with a budget between $150,000 and $650,000? In this article, we will talk about one investment option that will best suit this budget range. Keep reading to know more.

Long Lease Apartments and Villas

With a budget in the range of $150,000 to $650,000, long lease apartments and villas are the best options. When we mention ‘long’ we mean a really long lease, which typically extends from 25 to 35 years. More often than not, the landlord also offers a long extension option, between 15-25 years.

A chic contemporary villa in Canggu that offers a high return on investment.

Image by Bali Home Immo

Within this budget range, you’re also spoiled with choices. From the number of bedrooms, styles, to locations. With the long lease period it offers, you can also consider off-plan properties, which provide a more trendy style to market taste, and prices below the market compared to the finished one.

Long lease properties are excellent for investors seeking both an occasional peaceful retreat and a reliable source of rental income.

We have curated some villas that tick all the marks for investment. Check this link to explore more options for long lease apartment and villa properties in Bali.

Disclaimer: The content provided in this article is intended for informational purposes only and should not be construed as legal, financial, or investment advice. Bali Home Immo does not assume any responsibility for losses or damages incurred by readers based on the information contained herein. It is strongly recommended that readers consult with qualified legal or financial professionals and experts before making any legal or investment decisions.

Property Rental Yield in Bali

Bali Property Financing March 04, 2024 3 Min Read

This article discusses:

Bali emerges as an enticing destination for property investors, offering high rental yields fueled by its captivating landscapes and flourishing tourism.

This article elucidates the concept of rental yields, calculates Bali's average rental yields, explores factors influencing these yields, and provides strategies for maximizing returns.

By understanding Bali's rental property market dynamics and leveraging professional guidance, investors can capitalize on the island's real estate potential for long-term success.

Understanding Rental Yields in Bali

Rental yield serves as a pivotal metric for property investors, delineating the annual income generated relative to a property's market value. In Bali, where tourism thrives, rental yields notably surpass global averages, with an approximate 15% yield based on property purchase prices, compared to the global norm of around 5%.

Calculating Rental Yields

Bali's dynamic real estate landscape presents gross and net rental yield metrics. Gross rental yield offers a snapshot of income generation by dividing annual rental income by property purchase price. Meanwhile, net rental yield factors in additional expenses such as maintenance, management fees, and taxes, providing a more nuanced perspective on profitability.

Example Calculation:

Let's consider a property in Bali purchased for $300,000 and rented out for $45,000 annually.

1. Gross Rental Yield:

Gross Rental Yield

= Annual Rental Income/Property Purchase Price x 100

= $45,000/$300,000 x 100

= 15%

2. Net Rental Yield:

Let's assume annual expenses such as maintenance, property management fees, and taxes amount to $10,000.

Net Rental Yield

= ((Annual Rental Income - Annual Expenses and taxes) / Property Purchase Price) x 100

= (($45,000 - $10,000) / $300,000) x 100

= ($35,000 / $300,000) x 100

= 11.67%

(the numbers provided are only for exemplary means)

The example calculation underscores the favorable nature of rental yields in Bali. A gross yield of 15% and a net yield of 11.67% indicate strong income potential relative to the property's purchase price.

Factors Affecting Rental Yields in Bali

Several factors shape rental yields in Bali:

Location: Proximity to tourist hotspots like Canggu and Seminyak.
Property Features: Unique amenities like private pools or ocean views.
Property Type: Villas or apartments catering to diverse traveler preferences.

Maximizing Rental Yields

Investors in Bali can employ various strategies to maximize rental yields and enhance the overall profitability of their properties. Renovating or updating properties to meet the expectations of modern travelers, such as installing air conditioning, high-speed internet, or smart home technology, can command higher rental rates and attract more discerning guests. Additionally, partnering with reputable property management companies can streamline operations, minimize vacancies, and ensure optimal rental income throughout the year.

Investment Strategies in Bali's Real Estate Market

While high rental yields are undoubtedly appealing, investors in Bali's real estate market should consider their long-term investment strategy.

Investors can enhance rental yields by:

Property Upgrades: Installing modern amenities to attract discerning guests.
Effective Management: Partnering with reputable property management firms to optimize occupancy rates and rental income.

Seeking Professional Guidance

Navigating Bali's real estate market can be complex, especially for international investors. Seeking professional advice from local experts, including real estate agents, legal advisors, and tax consultants, can help investors make informed decisions and mitigate potential risks.

Bali's real estate market offers compelling prospects for investors, driven by high rental yields and robust tourism demand. By grasping rental yield dynamics, implementing strategic measures, and tapping into professional expertise, investors can unlock the full potential of Bali's real estate market for sustained success.

How to Acquire a Property using a PT PMA

Bali Legal Tips March 04, 2022

Buying property in Bali with PT PMA

The safest way for foreigners to acquire property in Indonesia is to register a PT PMA, which enables you to acquire freehold land and properties in the name of your company with the Hak Guna Bangunan (HGB) title. PT PMAs are eligible to hold this title for a maximum of 80 years, and it is the closest a foreigner can get to a lifetime Hak Milik title. Through the PT PMA, you reserve a greater degree of control over the land and property than a regular leasehold.

The difference between HGB and other titles

In a HGB title, the PT PMA is registered as the owner and has full rights to transfer the property throughout the validity period, whereas Hak Pakai and Hak Sewa only grants an individual the right to use the land/property thus he/she cannot transfer the title without the landlord’s consent. Another advantage is that HGB can be converted back to Hak Milik if the land is transferred to an Indonesian national, granting better flexibility when it comes to selling the property.

The HGB title differs from Hak Milik in that it is meant for commercial purposes whereas Hak Milik is for private use. In real estate, HGB is primarily utilized by property developers who develop properties with the intention of selling it again, although it can be used to acquire individual properties as well.

It is possible to purchase any land or property with the PT PMA regardless of the zoning, but nevertheless you should consider the land zoning so you can obtain the permits and business licenses for your property.

How to acquire a property using a PT PMA

First, you’ll have to register a new PT PMA or acquire an existing one, you can set up a 100% foreign-owned PT PMA in the Hospitality Management Consulting category for a short-term villa rental or the Real Estate category for a long-term villa rental. You can acquire property in the name of your PT PMA immediately after the company’s Articles of Association have been approved and the company’s tax card has been issued which usually takes around 2-3 weeks.

An important thing to note, according to Article 12 paragraph (7) of BKPM Regulation 4/2021, companies classified as PMA should have a minimum capital requirement, namely, a minimum Issued/Deposited Capital of IDR 10,000,000,000 (ten billion Rupiah) unless otherwise specified by law.

Once you’ve struck a deal for a property, the next step is agreement signing and title transfer. A Binding Sale & Purchase Agreement (PPJB) will be drafted with the name of your PT PMA, then both parties will sign the agreement. The Land Office will then convert the land certificate from Hak Milik to HGB, and the deal is finalized by signing the Sale and Purchase Agreement (AJB) and paying the tax for the transaction.

Investing in PT PMA does require a considerable amount of time and capital, but it also brings long-term advantages that are unattainable from other options available to foreigners as it not only allows you to acquire freehold properties (which are otherwise off-limits to foreign individuals) but also provides better legal protection over your investment as well as greater flexibility in reselling the property later. Working with a trustworthy agent and legal partners is the key to a secure investment, and you can always contact us for an expert’s advice on any real estate related matter.

Disclaimer: The content of this publication is provided as general information only and does not constitute legal, financial, tax, or other professional advice from Bali Home Immo. Historical results do not guarantee similar outcomes and we do not guarantee that the content of this publication is accurate, complete or up to date.

Established in 2009, Bali Home Immo is the first real estate agency in Canggu with more than 7000 Bali properties listed in its database. Bali Home Immo (PT. Bali Properti Kontruksi) is a licensed property agency (SIUP-P4 certified) located in Bali, Indonesia and have been successfully operating as a trustworthy and reputable real estate agency with more than 13 years of experience. Long-standing partnerships and a committed, dedicated team are the driving force behind the work that takes place every day at Bali Home Immo.

As a member of the Real Estate Broker Association of Indonesia (AREBI), Bali Home Immo Property offers luxury real estate across the region to a local and international client base. Catering to a wide range of property requests, the team will ensure they can find a property, land or residential listing, to match each client’s personal requirements.

We have curated a wide selection of properties ranging from the land for sale, villas for sale and rent, as well as commercial space rental in Bali's most in-demand areas including Canggu, Seminyak, Pererenan, Umalas, and Uluwatu. Not only Bali, but our connection also reaches other popular destinations in Indonesia including Gili Islands, Lombok, Labuan Bajo, and more.

We also provide professional marketing services that will showcase the best of your Bali properties to more than +160k social media followers and maximise the potential to find buyers looking at villas for sale in Bali. With a thorough knowledge of the Bali property market inside-out, we deliver the most professional and data-driven valuation of your property at the most competitive price for your Bali properties.

Our expertise in the local market and extensive network affiliated with 93 local and international partners including Goplaceit.com, Rumah123, Kangaloo, Luxury Estate, and many more will also help you bring global exposure to your real estate investment and find your dream Bali property. Looking to buy villas for sale in Bali? Check out our online catalogue of Bali real estate and follow us on social media for updates.