Buying property in Bali is a great investment, but what happens when you're ready to sell your villas? This is called an exit strategy.
As a smart investor, you need to plan your exit strategy to maximize your return (ROI).
Here, we'll talk about what an exit strategy is, common mistakes to avoid, and creative strategies to make selling your property in Bali smooth and profitable.
Contents
Key Takeaways
- An exit strategy is your plan for selling a Bali property at the right time to maximize ROI and reduce risks, best planned before purchase.
- Best exit options include rent-to-own agreements, lease options, and using property management to generate income while waiting for market conditions to improve.
- Key factors before selling: timing the market, making smart property improvements, marketing effectively, meeting legal requirements, and considering remaining lease time.
- Avoid common mistakes like misjudging the market, overlooking legal details, underestimating local knowledge, and rushing the selling process.
See What’s on the Market: Available Bali Villas for Sale - Leasehold and Freehold
Understanding Exit Strategies for Real Estate
An exit strategy is simply your plan for selling your property when the time feels right. It’s how you make sure you get the best price and keep the process smooth and stress-free.
Think of it as your “what’s next” plan. For example:
- Will you sell the villa in a few years?
- Extend the lease?
- How many years will be left on the lease when you’re ready to sell?
It’s smart to think about these options before you even sign the purchase agreement. Why? Because your exit plan should guide all your other investment decisions.
It also acts like a safety net if the market changes unexpectedly. We've seen many investors who don't have exit plan end up stuck with a property they can’t sell when they need cash fast.
Pro tips: Run different exit scenarios—both early and late sales—to see how timing could affect your returns. This way, you set realistic expectations and prepare for whatever the market throws at you.
Read More: Worried About Buying a Property in Bali That Won’t Make Money? Here’s How to Avoid That
Best Exit Strategies Real Estate Bali for Foreign Investor
Now that we've covered the basics, let's explore creative ways to sell your property in Bali. These strategies can help you attract more potential buyers and get a better deal.
1. Rent-to-Own Agreements
A rent-to-own agreement is a special arrangement where you let someone rent your property with the option to buy it later. Think of it as giving them a chance to “try before they buy.”
This method is recommended since it attracts buyers who love the property but aren’t ready to buy outright, for several reasons, such as needing more time to save or secure financing.
You get the benefit of a committed tenant who cares for the property, while they gain a clear path to homeownership.
How it works:
- The tenant pays monthly rent, just like a normal rental.
- A portion of that rent goes towards the future purchase of the property.
Things to note: This type of agreement is more complex than a regular sale. You should work with a lawyer to make sure it’s fair and protects both you and the tenant.
2. Lease Options
A lease option is similar to rent-to-own, but with a few key differences.
If your tenant decides to buy your villa, the option fee goes towards the purchase price. But if they don’t, you keep the fee.
How it works: The tenant has the right (but not the obligation) to buy the property at a set price within a certain timeframe.
For example, let's say you agree to sell for $400,000 anytime within the next 3 years. The tenant pays a non-refundable option fee (e.g., $10,000) for this right.
3. Property Management as an Exit Strategy
Sometimes, the smartest exit strategy isn’t selling right away. If you’re not in a rush to sell, you can simply hire a property management company to handle the rentals—both daily and monthly.
This way, you can earn ongoing rental income while you wait for the market to rise. This method is also useful if you don’t live in Bali full-time.
How it works:
- Find a management company that offers full service of your rental
- A management company will take care of finding tenants, handling maintenance, and managing bookings.
- Your manager will send monthly reports for you.
Read More: Can Foreigners Rent Out Villas in Bali? Here’s How to Do It Right
Factors to Consider Before Your Property Exit
Let's talk about some important things to consider before you decide to exit the property.
1. “Timing” the Market
Knowing when to sell your property is like knowing when to pick a ripe fruit. If you pick it too early, it's not as good. If you wait too long, it might go bad.
The same goes for selling property in Bali. The property market in Bali can change depending on the time of year.
For example, during the busy tourist season, more people might be looking to buy property, which could mean you can get a better price.
But it's not just about the time of year. Sometimes, big things happen that can change the property market. Maybe a new airport is being built, or a popular area is getting more crowded. These things can make your property more or less valuable.
So, how do you know when it's the right time to sell? Unfortunately, we can't predict the market perfectly. That’s why it’s essential to know updates about local developments and changes happening in Bali.
Pro Tips: You can work with a knowledgeable and reliable real estate agent. They keep track of market trends, new infrastructure developments, and buyer demands.
Read More: How an Agent Can Help You Market Your Property
2. Property Improvements
Source: Bali Villa Realty - 1-bedroom off-plan villa in Canggu for $125,000
Now, let's talk about making your property look its best before you sell it. Sometimes, small changes can make a big difference.
For example, a fresh coat of paint can make a house look newer and cleaner. If you have a garden, making it more appealing can make people imagine themselves relaxing there.
But be careful! You don't want to spend too much money on improvements.
The goal is to make changes to help you sell the property for a higher price. A good rule is to focus on features that appeal to most buyers, not just things you like.
3. Marketing Your Property
Source: Bali Villa Realty - 3-bedroom villa for sale in Canggu
These days, a lot of marketing happens on the internet. Good pictures of your property are really important to catch potential buyers’ attention.
People might decide if they want to see your property just by looking at the pictures online. Some sellers even make videos of their properties, and their properties sell or rent out faster.
Your real estate agent can help you decide what marketing will work best for your property.
4. Understanding Legal Requirements
Selling a property involves a lot of paperwork. Bali has special rules about selling property, especially for foreigners. Our best suggestion is to work with a notary.
They'll check that you have the right to sell the property and that all the taxes have been paid.
Remember, in Bali, foreigners usually can't own property the same way locals can.
This means the paperwork for selling might be a bit different. Your real estate agent and notary can help explain what you need to do.
5. Considering the Remaining Lease Time
Here's something that many people forget to think about: how much time is left on the lease.
In Bali, foreigners often buy property through long-term leases instead of owning it outright. So, when considering selling, the time left on the lease is really important.
If there's a lot of time left, like 20 or 30 years, that's great! It makes your property more attractive to buyers.
But if the lease has only a few years left, it may be harder to sell. Some buyers might not want to buy a property if they can only use it for a short period.
The good news is that sometimes you can extend the lease before you sell, making your property more valuable. However, extending a lease can take time and money, so it's something to consider early.
Read More: How Long Should Your Lease Be When Selling a Property in Bali?
Common Pitfalls to Avoid
When it comes to selling your Bali property, it's not just about knowing what to do. It's also about knowing what not to do.
Let's talk about some common mistakes foreign sellers sometimes make and how to avoid them.
1. Underestimating the Importance of Local Knowledge
Selling property in Bali is not the same as selling back home. The Bali market has its own quirks and customs.
For example, buyers in Bali often negotiate much more than in some Western countries. If you’re not ready for this, you might get frustrated—or worse, lose a sale.
Solution: Work with a local real estate agent who knows the Bali market. They’ll guide you through the negotiation process and show you what’s normal (and what’s not).
2. Overlooking Legal Details
Foreigners selling property in Bali face specific legal requirements. Ignoring them can cause delays or costly surprises.
We often find cases where sellers forget to settle all required taxes before selling, which can stall the deal at closing.
Solution:
- Work with a reputable notary from the start.
- Make sure all paperwork, taxes, and permits are complete before you list your property.
3. Misjudging the Market
It’s common to believe your property is worth more—or less—than it really is. However, be careful because this can lead you to overpricing or underpricing.
If you overprice your property, it may sit on the market for months. This will make buyers suspicious and think there’s something wrong with it.
On the other hand, underpricing your villa will give you lower profits. You might miss out on better profit if you sell too quickly.
Solution: Get a professional property valuation. This gives you a realistic and current market value for your villa, land, or apartment.
Read More: Which Area Dominated Bali’s Real Estate Market?
4. Rushing the Process
Selling a property is a big deal, and it’s natural to want it done quickly. But from our experience, rushing can lead to costly mistakes.
For example, some sellers accept the first offer, even if it's lower than hoped, just because they're eager to finish the process. Others might skip important steps like property inspections to speed things up.
Solution:
- Take your time and focus on a quality sale, not just a quick one.
- If you’ve prepared well and know your property’s value, you can wait for the right buyer.
Remember, it's okay to take your time.
Conclusion
Now you know what an exit strategy is and why it matters for foreign investors in Bali. In short, this plan can protect you from sudden market changes and help you minimize losses.
Remember that every property is unique, and so is every seller’s situation.
Not sure which exit strategy is right for you? No worries — our experienced agents understand the unique side of Bali’s property market and are here to help.
We can guide you to:
- Navigate the legal requirements
- Understand the current market conditions
- Choose the best strategy for your goals
Click the button below to book your free consultation and discover the best way to move on from your Bali property investment.
FAQ
1. Is real estate in Bali a good investment?
Yes. Bali’s property market offers strong returns, with average yearly rental yields of 8–12%. In prime areas like Seminyak or Canggu, some high-end properties can even deliver returns of up to 20%.
2. What is the simplest exit strategy?
If your business is doing well and attracts buyers, liquidation can be one of the quickest and easiest options. Just keep in mind, the returns might be lower because you’ll only earn from selling the business assets or inventory.
3. What are the risks of an exit strategy?
Any exit strategy comes with risks. The transition can cause disruptions, and you might lose key staff, customers, suppliers, or partners. Changes in ownership or management can also affect important business relationships.
