What investors must know about leasehold investment in Bali

  • Bali Villa Realty by Bali Villa Realty
  • 3 weeks ago
  • Blog
  • 0

You’ve probably heard us talk about leaseholds a lot around here.

There’s a good reason for that.

Since foreigners can’t own a property in Bali outright, a leasehold is a great option for investing in property in Bali.

It’s also a great option for investors looking for a higher return on investment…

When executed correctly, a leasehold doesn’t require years to understand Bali’s property market.

But what exactly is investing in leasehold properties?

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What is a leasehold property?

A leasehold means you’re renting the property for a long time—usually between 25 and 80 years. 

It’s like having all the benefits of owning a home or villa without buying it outright. This setup is perfect for Bali, where the law makes it tricky for expats to own land directly.

Why leasehold can be a great option

Going for a leasehold property is practical for foreigners who want to dive into Bali’s property market. 

It’s more than just a long-term rent; you enjoy the property as if it were your own. 

You can even make money from it by renting it out to others. 

The key is to pick a lease that fits your plans. If you want to stay safe and have options for the future, you might choose a lease for 30 years with the chance to extend it for another 30.

This way, you can profit if the property’s value increases.

Imagine having a cozy villa in Bali that you can escape to whenever you want or rent out when you’re not there. 

It’s all possible with a leasehold agreement.

Over time, as Bali continues to attract visitors, the value of your place could increase. 

This makes your investment a ticket to the beautiful life in Bali and a smart financial move.

Whether you’re looking to settle in Bali or find a profitable investment, going leasehold could be your perfect match.

1. Easy for Foreigners to Get Started

If you’re from another country, getting a leasehold property in Bali is much simpler than buying land outright. Indonesia has some rules that make it tough for foreigners to own land directly. 

But with a leasehold, you can sign up for a deal that lasts up to 25 years and extend it later. This way, you avoid all the complicated legal stuff that comes with trying to own land.

2. More Affordable

Choosing a leasehold villa means you don’t have to spend as much money initially as buying a property outright. 

This makes it easier for more people to jump into the Bali real estate game, even in popular spots that usually cost much more.

3. Flexible Deals

When you choose a leasehold, you can often renew or extend your lease once the initial term is up. 

This is great because it means keeping your investment safe longer without immediately committing to owning the property.

4. Great for rental returns

Bali is a popular tourist destination, meaning you can make good money by renting out your leasehold villa. 

If your villa is where many tourists like to go, like Seminyak or Ubud, you could earn a lot from rent, especially when many people visit Bali. 

This can make owning a leasehold villa a really good investment.

These points show why getting a leasehold villa in Bali is smart. 

It’s easier for foreigners, doesn’t cost as much to start, gives you lots of flexibility, and can be a great way to make money because of all the tourists who want to stay in Bali.

Finding and Buying a Leasehold Villa in Bali

Buying a leasehold villa in Bali requires careful planning and understanding. Here’s how to do it: cover all your bases without getting caught up in too much complex jargon.

Step 1: Do Your Homework

Start by checking out areas in Bali that are popular for leasehold properties. Places with many tourists, like Seminyak or Ubud, are great if you consider renting your villa. This research helps you find a spot where your villa won’t just sit empty.

Step 2: Get to Know the Rules

It’s important to understand how leasehold ownership works in Indonesia. This includes knowing how long you can lease a property and what rights you have. It’s slightly different from buying a house outright, so ensure you get the hang of these rules.

Step 3: Start Looking for Your Dream Villa

You can search online or contact local real estate agents who know the area well. Say you want a villa close to the beach; an agent can help find you a perfect spot in places like Canggu or Jimbaran that match what you’re looking for.

Step 4: Work with Experts

Finding a good agent and legal advisor who knows leasehold properties is key. They’ll help you understand your lease agreement and ensure everything’s in order. They can also point you to a trustworthy notary or legal advisor who’ll review the lease agreement to protect your investment and check on extending the lease.

Step 5: Doing Your Homework Right (Due Diligence)

When you’re serious about a villa, here’s what to look into:

  • Legal Check-Up: Make sure the property’s lease agreement is clear, especially about how long the lease lasts, options to make it longer, and any rules you need to follow.
  • Who Owns It: Check the land title to avoid any surprises about who owns the land or if there are any legal problems.
  • Inspect the property: Visit the property to see its condition. You want to avoid spending extra on fixing things up after you’ve bought it.
  • Prepare a buffer: Understand all costs, not just the villa’s price. This includes taxes, upkeep, and any community fees.
  • Following the Rules: Ensure the villa follows local building and land use rules, especially if you consider changing it.

For instance, if you’re eyeing a villa in Seminyak with a 30-year lease, you’d want to make sure you can extend the lease so that there’s no disagreement about the land’s ownership, inspect the villa’s condition, know about any taxes or fees, and ensure it’s built according to local laws.

Taking each step seriously and working with knowledgeable professionals will help you navigate the process of finding and buying a leasehold villa in Bali. 

It’s all about being well-informed and cautious to ensure your Bali villa dream comes true without any unexpected hitches.

Are you paying the right price?

When you’re looking to buy a leasehold villa in Bali, especially as someone from another country, it’s super important to ensure you’re paying a fair price.

 Here’s a simple guide to help you figure out the best price for your dream villa in Bali, making the process less overwhelming and more exciting.

Step 1: Do Your Homework on Prices

Start by looking at other villas where you want to buy. 

Let’s say you love Seminyak for its lively atmosphere and beautiful beaches. 

You’d want to see what other villas in Seminyak are selling for, especially those that look like what you want in size and what they offer, like a pool or a big garden.

Step 2: Think About Where It Is

The spot where your villa is can change how much it costs. Like in Canggu, villas right by the sea might have a higher price tag than those in quieter areas like Ubud. 

Step 3: How Long You Can Stay

The price can also change based on the lease’s length. Usually, the longer you can stay, the more you’ll have to pay upfront. It’s like buying more time in Bali, so it makes sense that it costs a bit more.

Step 4: Check Out the Villa’s Condition and Extras

Take a good look at the villa itself. 

Is it brand new, with all the latest designs and a sparkling pool? 

Or has it been around for a while, and might it need some renovation?

 A newer, fancier villa with many cool features will likely cost more than something simpler that might need some work.

Step 5: Talk to the Experts

Chatting with people who know the ins and outs of buying property in Bali is always a smart move. A real estate agent can give you the scoop on whether a villa’s price makes sense for what it offers and its location. They can help you see if you’re getting a good deal or if you should keep looking.

Challenges and Consideration

When considering getting a leasehold property in Bali, it is essential to know how the lease length can make a big difference in how much money you might make and what the property will be worth later on. 

Going for a longer lease usually means your investment is safer, and the property could be worth more because people will be more interested in buying or renting it. 

Getting the chance to make the lease longer from the start can help keep the property’s value from decreasing as the lease gets shorter. 

But it also means lots of costs for upkeep and maintenance. 

We know all about the legal stuff and can ensure the lease agreement is just what you need, making the whole process smooth.

It takes a lot of time and research, as we mentioned above. 

But if you don’t have the time, consider working with a real estate agent like Bali Villa Realty

We will do all the work for you, including finding the property that suits your budget, negotiating the price with the property owner, doing due diligence, and more. 

Conclusion

Despite their short-term status, a leasehold gives you more profitable returns with fewer legal requirements. 

It’s a great option for a first-time buyer starting their journey in the property market in Bali.

Do your research, weigh the pros and cons, and remember a secure and profitable investment overseas is within your reach.

You’ve seen how profitable leasehold investment can be, so if you want to start your first investment property in Bali, our team is here to help. Book a free consultation or email us at office@ilotpropertybali.com.

Drop your questions in the comment section below, and let us know what you think about investing in leasehold properties. 


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