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Buying property in Bali sounds like a dream come true, right? But many foreign investors share one big fear:
What if the property doesn’t make any money?
It’s a valid concern. Nobody wants to invest their hard-earned cash into a property that doesn’t bring in returns, either through rentals or future resale value.
The good news?
This guide will teach you the right steps and careful planning to avoid common mistakes and ensure your property investment in Bali becomes a profitable venture.
Let’s dig into why properties sometimes don’t yield returns—and how to avoid this common problem.
How to Ensure Your Property Brings in Rental Income
One of the biggest fears for foreign investors is buying a property that doesn’t generate rental income.
The key to success lies in choosing properties that attract consistent renters and understanding the market.
Tips #1: Location Is Everything
Source: Beautiful 5-Bedroom Villa for Sale in Ubud
One of the biggest factors that determine rental success is location. Where your property is located will largely dictate its appeal to tourists and expats looking for long-term rentals.
1. Prime Rental Locations
Popular areas like Seminyak, Canggu, and Ubud are well-known for high tourist demand, making them safer bets for rental income. Villas in these areas are more likely to stay occupied throughout the year.
2. Emerging Areas with Growth Potential
Meanwhile, up-and-coming areas like Kedungu (Read–Discover Bali’s New Hotspot for Rapid Growth) and Uluwatu are growing in popularity. Investing in these areas could increase your property’s value over time, offering long-term rental potential as these regions develop.
Choosing the right location means you’re already halfway to ensuring your property generates steady rental income.
Tips #2: Leasehold vs. Freehold—Which Yields Better Returns?
Yes, your choice between leasehold and freehold matters.
Many foreign investors opt for leasehold properties because they’re more affordable upfront.
However, the remaining time on the lease plays a huge role in determining rental potential.
If a property only has a few years left on the lease, it’s less attractive to renters or future buyers. Properties with 20 years or more left on the lease are much better for long-term rental potential and future returns.
Suppose you’re eligible to own a freehold property (such as by forming a PT PMA). In that case, you’ll have full ownership and flexibility, often making it easier to sell or rent without restrictions.
A longer lease or freehold status means more time and flexibility to generate income and hold onto the property as a valuable asset.
Tips #3: Be Careful with Renovation Costs
Before buying, assess whether the property needs major renovations.
Properties requiring extensive repairs or updates can quickly drain your finances, cutting your potential profits.
If the property is already in good shape, you can start renting it out immediately without spending extra on renovations, saving you time and money.
Tips: Aim for move-in-ready properties or those that require minimal work so you can start generating rental income as soon as possible.
Also read: How Much to Buy a Villa in Bali?
Tips #4: Have a Solid Exit Strategy
You may want to sell the property at some point, and having a well-thought-out exit strategy is crucial. This ensures that you can sell for a profit when the time is right.
But when is the right time to sell?
There’s no one-size-fits-all answer. The best time to sell is whenever you feel ready.
Of course, market conditions can play a role, but the decision shouldn’t be entirely based on something out of your control.
If your circumstances have changed or you feel you’ve achieved what you wanted from your investment, it’s time to sell.
It’s not just about what the market is doing; it’s about your needs and goals.
Bali’s property market tends to appreciate over time, so you’ll likely see a positive return whether you sell now or later.
To ensure a smooth and safe selling process, follow the proper legal process and work with trusted professionals.
Tips #5: Understand the Local Market
Failing to understand the Bali property market is a common pitfall for new investors.
Understanding what types of properties are in demand and who your potential renters are is key.
Who’s your ideal renter? Families, vacationers, and digital nomads each have different needs.
Know your target audience so you can select the right property.
For example, vacationers may want a beachfront villa, while digital nomads prefer a peaceful retreat with fast internet.
Knowing your audience lets you choose a property that aligns with rental demand, keeping it occupied more consistently.
Tips #6: Stay Competitive
Bali has many villas available for rent, and knowing what’s out there helps you stay competitive.
Look at similar properties in the area to see how much they charge and how often they’re rented.
It’s tempting to charge high rent, but if your price is too high compared to others, your property could stay empty. Keep your rates competitive to attract renters.
And is your property unique enough? What makes your property stand out?
Unique features like a great view, modern amenities, or a private pool make your property more desirable, increasing your chances of higher occupancy rates.
Also, check out How to Make Your Villa Unique and Stand Out in Bali.
Tips #7: Property Management
Source: Villa Management (TJM Bali)
You might be thinking, How do I handle everything if I don’t live in Bali full-time?
The good news is that you don’t have to manage the property yourself.
A good property management service can ensure your property stays rented and maintained.
Yes, property management comes with a fee, but it’s worth it if it helps keep your property occupied and maintained.
In the long run, it can increase your rental income by keeping your property in top shape.
Tips #8: Market Your Property to Attract Renters
Even the best property can sit empty if nobody knows about it. Effective marketing is key to attracting renters.
You can list your property on popular booking sites like Airbnb or work with a property manager who handles marketing for you.
It’s all about visibility—making sure potential renters see your property.
Early bird discounts or seasonal promotions can help fill your calendar, especially during slow seasons.
Protecting Your Investment
Investing in Bali property can be lucrative, but it is important to avoid common mistakes that prevent your property from making money.
By choosing the right location, understanding your market, securing a good lease or ownership structure, and properly managing the property—you’ll be on your way to a profitable investment.
Remember, real estate is a long-term game.
Patience, planning, and staying informed about market conditions will help you achieve your desired returns.
Ready to get started? Our team is here to guide you through every step of the process.
Book your private consultation below to discover how to approach your first investment property in Bali.
