6 Property Investment Tips in Bali for Foreigners

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By:

Team of Hukumindo

Previously, the www.hukumindo.com platform has talk about "John Howard, Sarjana Hukum Yang Juga Mantan Perdana Menteri Australia", "Sharia Investment: Definition, Characteristics, Types, and Benefits", "Understanding 5 Steps Foreign Direct Investment In Indonesia" you may read also "Is the Property Sector in Indonesia Open to Foreign Investment?" and on this occasion we will discuss about '6 Property Investment Tips in Bali for Foreigners'.

Investing in real estate is a profitable business and you can get the most out of it by doing it the right way. Property investment in Bali is still a profitable venture despite the pandemic if you realize the high demand is being held back by the border closures. Quite the contrary, the pandemic presents a golden opportunity to buy property in Bali because you will be ready to meet that demand when international flights are no longer restricted. Whether you're a first-time buyer or expanding your portfolio, these tips can help maximize the return on your investment:[1]

1. Long term property rental. Purchasing freehold property using a nominee agreement provides no legal protection and is not a recommended practice. The duration of the lease for long term rental properties in Bali is usually between 25 to 35 years and is sufficient for long term capital growth especially if you invest in a good location. While setting up a foreign investment company (referred to as PT. PMA in Indonesia) is the safest method for foreign property ownership, buying a villa or freehold land with a PT. PMA is recommended for medium to large scale investments as there is a minimum amount of capital investment that needs to be met.
2. Invest in a growing area. Buy property in an up-and-coming area like Canggu while there are still opportunities, especially in the Berawa neighborhood where all the hustle and bustle is going on right now and property values ​​are on the rise. Developed areas such as Seminyak and Kuta have little room for new development while property prices there are much higher. The growth in rental demand in developing areas is also stronger than in developed areas as it has been in the last 3 years, very profitable if you are planning to invest in short term property rentals. Don't ignore undeveloped areas around developing areas, instead invest in these areas early on. Rent, for example, is not yet as developed as Canggu but is a promising location for both long term investment and short term rentals.
3. Get to know the rental property market. This is especially important if you are looking to re-lease your property either on a yearly or daily basis, as market conditions vary by region from time to time. Knowing the latest trends, such as any price changes and average rental demand will allow you to recognize the current state and potential of the market, will allow you to invest in the right place and property. Even if you are just looking for a home to live in, it is very useful to understand the rental potential of the property as you might consider renting it out for cash flow when you vacation overseas or return to your home country. The income of a villa is determined by several factors such as the number of bedrooms, design and location. Income from different properties with similar specifications can vary easily, and you can make double your profit if you meet the right demand in the right area. The supply and demand for a given number of bedrooms also varies depending on the market for the region. For daily rentals, good management is essential as this will affect guest satisfaction and reviews. For long term rentals, proximity to international schools or co-working spaces will make your property more attractive to tenants with specific needs. This is one of the main reasons it is important to work with licensed real estate agents and local property management firms, and we will talk more about this later.
4. Consider buying an off-plan property. Off-plan properties generally sell for less than market value, and you don't have to worry about maintenance costs during low occupancy at times like this. Buying a property off-plan can be a cheaper option than fix-and-flip because renovation costs can easily increase if the property has hidden costs, and is something you should be aware of when browsing for cheap properties. Also, you can find off-plan properties offered with guaranteed ROI. It is wise to invest in large-scale off-plan projects as early as possible, because you will have the best units available before they reach their highest competitive prices. Most off-plan properties increase their prices as construction progresses, and buying an off-plan villa before groundbreaking will be 30% cheaper than when it is already built.
5. Appoint a reliable property manager. Look for a well-networked property manager who can help with the upkeep of your property, so you don't have a hard time finding housekeepers, gardeners, plumbers, etc. Hiring a manager is essential for rental properties even if you don't live far from your investments because the workload can be fully divided or delegated to keep you from the hassle, and is sure to be a lifesaver if you are renting out multiple properties at once. Guest satisfaction plays an important role in attracting customers, because online reviews greatly influence a potential customer's decision to rent your property or not. Thus, working with a good management company not only helps in maintaining your property but can also generate high numbers and reviews.
6. Consult a local real estate agent. Whether you want to buy property through an agent or need information, always seek help from a licensed agent. Local agents are the best source as they can provide accurate and up-to-date information including important information related to the property market, such as the prospect of renting an area and even the estimated rent of a particular property. In addition, the agent may have a property that perfectly suits your budget and preferences, saving you the hassle of navigating Bali's congested streets. Do not work with unlicensed freelance agents as they do not have the legal authority to handle real estate transactions. Even worse, you can be tricked into fraud, such as paying the property or the agent's commission more expensive than it should be.

And if you have any legal issue with this topic and interested in investing your fund in the property sector in Indonesia, contact us then, feel free in 24 hour, we will be happy to assist you. 

*) For further information please contact:

Mahmud Kusuma Advocate

Law Office

Jakarta - Indonesia.

E-mail: mahmudkusuma22@gmail.com

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Reference:

1. "6 TIPS INVESTASI PROPERTI DI BALI UNTUK WNA", //bali-home-immo.com., Diakses pada tanggal 12 Januari 2023, Link: https://bali-home-immo.com/id/blog/6-tips-investasi-properti-di-bali-untuk-wna