Investing in Bali Real Estate: How to Check if the Property Will Bring the Statutory Return?

Bali is a dream island that attracts not only tourists but also investors. The promise of a return of up to 17% per annum in dollars and an increase in value of up to 30% by the time you receive the keys to an apartment or villa sounds tempting.

However, before diving into the world of Bali investments, it is necessary to soberly assess the risks and check how realistic the stated indicators are. In this article, we will analyze three key steps that will help you to be sure that investing in real estate in Bali is profitable and avoid common mistakes.

The tempting figure of 17% annual return is just the tip of the iceberg. To get the real picture, it is necessary to carefully study all the associated costs that can significantly reduce your profit.

Let's look at the main points:

• Taxes: When selling a property in Bali, you will have to pay a tax of 11% of the transaction amount. This important factor is often overlooked by potential investors, significantly affecting the final profit.
• Utilities: Electricity, water and internet costs for a two-bedroom villa average $ 100-150 per month. To this amount should be added the cost of pool maintenance (about $ 200 per month) and cleaning.

• Maintenance and Repairs: Unforeseen repair costs are an inevitable part of owning a property. Budget for minor repairs and more serious breakdowns.
• Management: Renting out a property remotely through a management company (MC) means a commission, which is usually 20-30% of your income. Choosing a reliable MC is a critical issue that determines the efficiency of managing your property.
• Insurance: Don't forget about insuring the property against various risks, including natural disasters, which are not uncommon in Bali.

Only after carefully calculating all these expenses will you be able to get a realistic picture of your potential profit and the payback period of your investment.

Developers and sellers of real estate often provide optimistic profitability forecasts. However, your task is to obtain evidence to support these forecasts. If the property is rented out through a management company, ask to see:

• Income and expense reports:  Analyze the actual data for previous periods, paying attention to the seasonality of demand.

• Occupancy statistics: Make sure the property is actually rented at the rate advertised. Low occupancy will significantly reduce your profits.
• Detailed forecasts: Ask about the methodology for forecasting profitability. Reliable forecasts should be based on real market data and take into account seasonal fluctuations.
• Tenant reviews: If possible, read reviews from tenants about the quality of service and condition of the property.

Don’t limit yourself to just one property. Conduct a thorough analysis of the real estate market in the chosen area:

• Compare with similar projects: Evaluate the prices of similar properties, their location, infrastructure and level of demand.
• Study the developer’s portfolio: Make sure the developer is reliable and experienced. Check whether they have fulfilled their obligations in previous projects.
• Evaluate the quality of the property: Pay attention to the materials used in construction and the quality of the finish.
• Income guarantee: Pay attention to the availability of an income guarantee from the developer. This can significantly reduce risks.

Investing in real estate in Bali can be very profitable, but only with careful analysis and a cautious approach. By following the three steps described, you can minimize risks and increase your chances of receiving the stated return. Remember that careful due diligence is the key to successful investments.

Have you decided to buy real estate in Bali as a profitable investment or personal residence? Contact us!

Mercury Group specialists offer individual solutions for each client:

• we will monitor the market and select real estate in Bali that meets your criteria;
• we will support you at all stages of the turnkey transaction;