A Step by Step Guide to Bali Villa Ownership
- STEP 1 :Contact Us On Whatsapp
Let’s have a detailed discussion about your investment goals, market options and assess your purchasing capability.
WhatsApp : +(62) 822-2754-8982
Due to the dynamic nature of Bali property market, availability can change rapidly, highlighting the need for a timely decision-making ability
- STEP 2 :1-On-1 Meeting
After clarifying your preferences, we’ll schedule either a virtual or face-to-face meeting in Bali to present tailored villa options. A detailed contract overview for your chosen villa(s) will be prepared.
- STEP 3 :Formal Contract Signed
Once you sign the formal contract, it is sent to a Notary- the Indonesian equivalent of a settlement agent, who carries out all the due diligence on the property and the builder for the buyer.
A 10% deposit is required within 5 days to formalize the contract with a full refund available should you not decide to proceed after the due diligence is conducted.
- STEP 4 :Construction Commences
At this stage, 15%-20% of the payment is due, before construction commences.
Note: It will generally take 10-12 months from slab until completion.
- STEP 5 : 2nd Payment Due
After 150 days of signing the contract, an additional 20% payment is due to the builder, through the notary to continue construction.
- STEP 6 : Finishing Stage
With the roofing in place, another 5% payment is required. This marks a significant milestone in the construction process, paving the way for final touches.
- STEP 7 : Completion and Rental Income
From this point, no further upfront payments are needed.
The remaining 50%-60% of the balance will be generated from rental platforms like Airbnb, Booking.com, etc., over 48-months, illustrating the investment’s self-sustaining nature.
- STEP 8 : Payment Plan Commences
After 48 months, your investment is fully paid, leaving you with a 21-year leasehold (extendable) to enjoy substantial profits.
- STEP 8 : Long-Term Profit
FAQ
What are the areas and what is the demand for this area?
Different people from different countries have their own favorite area of Bali, so no one is any better, just different, we have no preference. However, we suggest if you are after higher yields (ROI), then focus on areas, that will tend to have the highest occupancy rates, such as close to beaches, cafes, bars, restaurants, supermarkets etc
Are the rents guaranteed once complete?
Rents are the same as in your country. There will be some high months and some low months, so you need to have contingencies in place. Remember this is an investment for the longer-term.
Are these properties rented out more by expats or tourists?
Like in your own country, short term stays will attract tourists and will always pay more than long term renters, who are generally expats (who tend to take leases from 1-5 years). So, who stays is up for you to decide, based on your investment goals, cashflow requirements and the ROI you are looking for.
Who manages the marketing to get the tenants/ tourists to book your place?
Either you, us or 3rd party management companies, of which there are many, so this is up to you to decide. We can give you assist you in giving you some recommendations to take the headache out of it, should you not want to manage it yourself
How much do local property management companies charge?
Typically, the rate is between 15% to 30% depending on the level of service provided. These can also include marketing services to Airbnb and Booking.com, etc. Larger companies will charge more and the level of service will vary from provider to provider.
What do I need to do to be able to rent it out on Airbnb, Booking.com etc
Well, you will need to register as a foreign company in Indonesia, known as a PTMA company, you will also need a tax ID number and an investor’s KITAS visa, to easily come and go into the country. We can help you arrange this through our legal advisors and lawyers
What if I am not able to rent it out for a period of time?
The same applies as in your home country. You cannot expect 100% occupancy rates. There will be high months and there will be low months, but it is the average over the year, you need to be concerned with. With high months, you charge more, which often make up for the low months. In popular areas, the average occupancy rate can be as high as 80%. However, we suggest a more modest 65-70%, when doing your calculations on ROI. Anything over that is simply a bonus!
Can I stay and live in the property for a period of time?
Of course you can, it’s your property, you just block out the times you want to stay on Airbnb and just pay for the time you stay there to keep up with the monthly instalments. Treat yourself just like any other tenant. As a bonus, you also save on your accommodation bills, by not having to book another hotel or villa.
Is the rental income dependent on tourism?
If there was no long-term income, say there was another pandemic event, like COVID, you would still be required to come up with payments to the developer. This is no different to your own country. What would happen in your country, would be identical in Bali
Which is better freehold or leasehold title?
Again, it depends on your preferences; in Indonesia, freehold is never truly “freehold” like in the UK, USA, or Australia. It is more like extended leasehold. Furthermore, it can be more complex to get, it costs much more, and often the capital gains are not as much as leasehold land. Leasehold land is much more straight-forward to obtain, it is protected by strong Indonesian Laws. The thing to remember, with your investment in Bali, you are potentially building your own “cashflow machine”, the profits of which can be used to pay your freehold property mortgage in Australia (if you have one), or can be used for your lifestyle, once your property is paid off
What is the tax rate for property in Indonesia?
Currently, it is 10%, and there is no capital gains tax, like in many countries. Many countries including Australia, also have a double tax treaty with Indonesia, so, you should be able to avoid double taxation. However, please seek professional advice from an accountant or a tax consultant on this, as it will vary from country to country and your personal circumstances
How long is the lease and how does it work? Are there any circumstances where the government or land owners could cancel the lease?
Leases typically range from 25 years for a property, but can range anywhere from 1-35 years. Most buyer prefer a long lease and it is protected by strong laws, so it cannot be cancelled
Can the leases be transferred or sold?
Yes, they can, just like freehold property, there will a market value, according to the land value, and the value of the building, just like any property in your home country. The leases will improve in value as demand and gentrification occur and infrastructure and local services improve, just like anywhere in the world
Can the leases be extended?
Yes, they can, be extended a further 25 years, and another 20 years (up to 80 years maximum), however, this will be dependent upon the landowner, and should be negotiated in advance, typically 5 years before the expiration of the lease
How will the leases be extended, after the expiry and under what basis?
Typically, the landowner, and yourself can assign up to three valuers, and the average is taken on the value, and can be negotiated with the land owner
What are the hidden costs of owning a property in Bali?
As with any holiday rental property, there will be utilities bills (such as electricity, gas (for cooking), water) and also council (known locally as Banjar) costs which need to be paid, as well as day-to-day rental expenses such as laundry and maintenance etc. If you don’t want the headaches of managing it yourself, these expenses can be managed by an external property manager. Most of the expenses are negligible and will all be taken out of the monthly rental income. All professional property managers, will provide a monthly report of the expenses and the profit for you. But remember, these property managers do charge a fee and the level of service can vary considerably, so its best to choose carefully. Of course, we are able to give you recommendations based on the people we have already used. Our advice is don’t focus on the price, rather focus on the quality of service and level of attention to detail you will receive. Price becomes irrelevant if you have happy customers
How much are rents and how do the different types of property (i.e. villas, apartments, townhouses, houses, etc.) and regions vary in terms of rents?
Naturally, like with any rental in any country, they can vary considerably based on location, quality, style, amenities etc. Please see the website www.Airdna.co which can give you a good indication of what your property might be worth. We can also provide you with an independent report from numerous property managers, who have done the research and can give you an indicative price and ROI on the property.
What happens if there’s a problem with the tenant? For example, he/she doesn’t pay the rent or the breaks a lease? How is it resolved
The laws in Indonesia, are quite strict and can be enforced almost immediately. Eviction in Bali will take as little as 24-48 hours, and could involve the police
As a buyer, what happens if I fail to make a payment on the monthly payment plan to the developer
As it is under vendor finance contract, you have 30 days to make good on any back payment, as the developer has the right to take back the property (and will do so), if you do not follow through
Have the properties been built yet?
In most cases we work off-the-plan, which often means they have not been built yet. However, they can often be in various stages of build, some may not have been started, some half built, while others completed. The thing to remember here is the when you are buying off-the-plan, you are able to get a significant discount, as the builder will often use your funds to commence building. As the build progresses, the price will also increase to the point where, once the building is finished you are paying retail price which is typically 30-40% more than the off-the-plan price
What is the benefit of purchasing off-the-plan?
The main benefit of purchasing off-the-plan is you are able to lock in a wholesale price today, and you wait for a period to get it built. In the meantime, the capital value of the property also appreciates, sometimes up to 40%. Some of our clients, once they receive the handover of the property, “flip” it, and are able to make a tidy profit.
How long will it take to build an off-the-plan building?
Typical build time in Indonesia is 10-12 months, and can be subject to delays due to the weather or Force Majeur
What are the risks with purchasing off-the-plan?
The main risk is the building doesn’t get finished or is continually delayed. We mitigate the risk by only choosing developers and builders that have track record in their construction. We also inspect their build quality and finishing to ensure they are consistent with our expectations of a Western-style build, style and finish, otherwise, we will NOT work with them
What if I am not satisfied with the builder’s quality?
We have a 100% money-back guarantee. At the time of the handover, we give you two options:
- Take the keys to your new property
- Refund your money