Vacation Villas can look beautiful and luxurious, often they instil the desire to own one. However, if the financial aspects are important to you and you want the villa to be a lucrative investment, there is more that counts than that the property looks nice and that you would like to stay there. Most of the information you will see about the financial returns on your investment will come from sales agents and they are clearly subject to conflicting interests and are not calculated based on your perspective as an investor. Real Estate investments are not easy and while there are great deals out there, there are risks involved that you should understand and there are also lots of bad offers in the market. You need to evaluate the offers very carefully and be prepared to walk away. With the channel Villanomics, I publish videos that are entertaining, but also give you the knowledge and insights to navigate the world of real estate investments.
What about cost of your investment ? And daily rent is how much around ? ROI expectation is how many years ? Can you give some detailed numbers so we can understand well the situation. Thanks a lot and congratulations
I've just discovered your channel and would to thank you for providing clear and informative information, great job, very timely for me. It would be interesting to know how you select your builders and the construction costs. It looks like you've bought from a villa estate build, rather than buying land first then finding builders or contracting out the build/design - have you done it this way also? If so, I'd be extremely interested to see a video on the pro's and con's on this from you.
Really appreciate your content, pls keep it up!! Just wondered if you thought there were additional costs to being a 'bule' when negotiating/purchasing materials etc? Bule pricea will hopefully not make too much of a dent in costs..
I really enjoy your videos! This villa looks amazing, I really liked how this small place is done, it feels comfortable and has everything that bigger villas offer. I especially enjoyed the touch with the handmade mirrors. I would like to know what was the cost for building this and if you can give us a breakdown of all the costs included.
I'm your new fan now. Thank you SO MUCH for such a wonderful breakdown! As someone who's considering investing in Bali, it gave me lots of lessons learned. Best of luck to you and your investments!
Hi thank you for sharing such an informative video with us all its much appreciated! I’m not too sure if I heard correct but did you say you built it at the start? As towards the end you said something about depreciation because of the lease so could you explain a bit further as I’m confused a little bit 😅
Sure, let me try to clarify. I have built the villa on a plot of land that I leased for about 30 years. After that, the land and the villa will revert back to the freehold owner of the land. Therefore, I depreciate the value of the asset (leasehold and building) over that duration.
You forgot to mention that Hidden Village and Parq are Russian developers, so from Russians for Russians, which probably also explains the low prices. In addition, real estate developers today pack as many beds as possible onto one property. I don't understand, why should I live in a townhouse in Bali like in Midtown Manhattan...? 🗽That's why I'm really not coming to Bali... but well, still better than Siberia...😂 I would never live there myself, for what reason ever... I myself have been living in Ubud for over 5 years in a small villa with lots of greenery and rice fields all around it...🏝
I agree, I like Bali for the nature and calming environment. If I want an urban place, I would go somewhere else. But to each his own, some people like this style.
What a great place you built there sir. You should be proud of your work. Can I ask if you could elaborate the options for a person that perhaps wants to built a new life in bali and is not wealthy but yet very handy/handson. Perhaps you could give some examples of how "little "money it takes to lease a small plot of land in different areas. ie.e munduk. lovina. or near the crater lakes and just want to built something for themselves? Im pretty confident considering the state of the world this topic might bring you a lot of viewers/people that are looking to start a new way of life and how doable it is. (perhaps for personal use only instead of leasing out) might lower the bar a lot and create a lot more clarity for people that want to know/learn? Thank you.
Let me think about it. My initial thought is that people who want to move to Bali should rent a place, at least for a year. Most people who dream of a life in Bali leave after a year or so and in that case, they would be better off renting. I'll look into it.
@@villanomics thank you I appreciate your reply. But in this case I have been to bail 12 times 3 or 4 weeks at a time and am pretty familiar with life in bali yet Im open to be learn more. Love your channel/edu!
Hi, please send me an email and I will reach out to you when I come across something interesting. Maybe you can specify what you are looking for and I'll keep it in mind.
In all your videos so far, you never mention the tax rate. Is it 10% or 20%. I think it is crucial for us to know because your advices and info are amazing so that i personally think to invest this year. Thanks for your videos
Hi Duke, thank you very much! As for taxes, I intentionally avoid talking much about taxes. Income taxes on the profits you make from your investments depend a lot on your personal circumstances, for example where you have your tax residence. So it is not possible to give a generic answer that is correct for everyone.
@@villanomics Thank you very much for your answer. The country I pay taxes is Hong Kong who has a double tax treaty agreement with Indonesia so I am on 10% after doing my own research. I have two arranged phone calls with agents and the reason I asked you is that i know the agents will not provide the whole truth but what is convenient for them to sell services. Based on your video at the end you had an 8% yield excluding all expenses. Including the taxes a 7% yield is realistic? That’s all i would like to know if possible. A 7% at the end is ok but if less i would be very skeptical for my own investment. Thanks again
Maybe I did not hear the part that after the 25yr lease that you also have a $200k+ house? I did not see that added into the equation.. or I am blind and deaf.. OR is it that you actually do not own your house?? (Can you not sell it before the lease ends or if you get an extension?)
From yourself ;-) It is just to support the calculation and show that you are missing out on earned interest on your savings if you invest it in the villa.
Great video, very informative. Obviously there has to be a management fee, is this accounted for in operating expenses or in the rental income received? How is the villa marketed, airBNB, Agoda, other? Thanks
operating expenses and villa management are separate. Operating expenses are things like laundry, electricity, replacing or fixing things, cleaning... Villa management is managing bookings and guests, but also coordination and oversight on operations.
thank you for your video..its deep analysis ..very usefull ..👍 may i know what items normally sitting in operational expenses .. also appreciate , if you could make the analysis on second year performance 😊 may we consider the performance will be declining in coming yewrs since the villa would need more & more maintenance as its ageing ? thank u
Operating expenses are things like electricity, cleaning, laundry, salaries of staff... I will make another video on the second year when it is over and I have the numbers. Can't wait myself to see if it gets better or worse ;-)
Hello, sorry if my question is out of place, right now I’m in Ubud and I’m trying to figure out how to move to buy a house. I am following your videos very carefully but I realized that I would need more specific support. Would you be available for a meeting to chat a little better?
Hi mate, I tried to answer you many times giving you my mail but it erase it. Probably I can’t write it in here. Is there a way to write you directly? Thanks
Thanks to RU-vid algorithm, I stumbled upon your channel while browsing all these Instagram feeds and RU-vid channels that keep promoting property sellers like propertiabali with their promotional content and brochures, claiming insane returns of 34%. It sounds enticing at first, but I always suspected there was more to the story. It’s not all roses and paradise in Bali, Indonesia. Investing 300-400K USD and expecting an insane 34% return seems too good to be true. However, after watching your channel and analysis, I really appreciate the truth you reveal. I’m interested in booking this four-bedroom Airbnb you mentioned in this video to experience it firsthand. Can you share me the link for this in Airbnb ? From the pictures and brochure, it looks like paradise on earth. Also, I have a separate question: What are the best areas for expat, retirees to live in Indonesia?
Yes, absolutely, you start with low rates to get some first bookings and gather your first reviews. However, you would offer at higher rates beyond the first 3-6 months in order to establish sustainable rates and get to the revenue you need. Accepting bookings at low rates in the far future is a bit unusual.
Hello Mate Please help me understand. Why do we need to depreciate? So as time goes by, does the villa lose value instead of increasing? Can't it be sold in 5 years at the same price or more? Furthermore, won't your income (renting fee) increase every year as the purchase price increases? Thanks in advance!
Because you don't buy property free hold in Bali as a foreigner, you only lease it for x years, 25 years being the most common. You can extend up to 80 years in total (50 years for building), but you will have to pay the same money (+inflation & appreciation) for the extension.
@@trdi We can call it what we want, but we (foreigners) can't sell the lease? Let's say you rent out the villa at a 15% net ROI for 5 years, then you can sell the lease to someone else. Since prices are "supposed" to rise, the lease will be worth more. Of course this is negated by the fact that it is worth less due to a shorter rental period. Suppose the two cancel each other out, you made 15% a year, then sold it for the same price you bought it for. I would like to understand this more clearly. If prices rise at a higher rate than they are worth less because of the shorter rental period, you can make a profit on that too. In addition, if you can rent it out for more money year after year it further increases your profitability.
@@trdi You're confusing leasing with certified land titles such as Hak Guna Bangunan (the Right to Build) and Hak Pakai (the Right to Use) that have legally mandated maximum (but not minimum) durations for initial and extension/renewal periods and are registered with the National Land Office. A simple property 'leasehold' is not a recognised form of title in Indonesia (unlike in Common Law countries) and is just a private contract between the Indonesian owner (who retains legal ownership title at all times) and the foreigner (who must reside in Indonesia) that allows the foreigner to 'possess and use' the owner's property for a mutually agreed period of time. Leases are loosely governed by the Civil Code which does not mandate either a minimum or a maximum duration for a lease (I have seen one that was for 100 years) or even the terms and conditions of the lease agreement such as a right to extend etc. - it's all up to the parties involved to negotiate everything. None of the above options allow a foreigner to run a short term letting business however.
@@janoka910 Don't be taken in by these delusional and misleading RU-vid videos. There's no legal way for a foreigner to lease a villa then rent it out on the short-term market - all commercial transactions must be through a registered business and foreigners can't register a business - and leases (which come under the Civil Code and are not subject to mandated initial, extension or maximum terms) cannot be the subject of sale-and-purchase under Indonesian law - they can only be transferred with the owner's agreement. This guy has also made a serious miscalculation in his analysis by allowing the full 29 years of the lease to recover the capital employed when most houses in Bali, which has arguably one of the worst building standards in the world, will not be in lettable condition to Airbnb standards after just ten years as the effects of tropical heat, humidity, rain, ants, termites, vermin, earthquakes and foundation subsidence (most are built on land that was a rice field for a thousand years and use less than one metre of un-compacted soft coral stone for the foundation fill) cause leaking roofs, sagging ceilings, warped woodwork, jammed doors, cracked walls (soft bricks joined by mortar mixed with beach sand), peeling paint inside and out and leaking swimming pools no matter how good the maintenance along the way.
Thank you very much. New Bali investor here, I would like to ask if you could do a video about the build the costs, issues and advice for new villa startups. Cheers
Dear Villanomics It's very important to consider that in addition to the fact that the villa can pay off itself in 9 years, you still have the villa you can sell. If you calculate that you will sell it after 9 years (even for the same price you bought it for) then you have a completely different return spread over those 9 years. I would be really interested to know how the price of the villa changes in the case of this leasehold thing? How much can you sell it for say 10 years later? Is there a rule of thumb on how to calculate this? Thanks!
Good point. I am interested in investing myself and I am looking for a property with a 30 year lease with the option to renew. This option alone will be a good selling point when the time comes to divest yourself of the property.
Are those expenses including staffs, AirBnB fee? Did you hire a villa manager through an agency? What is the cost for villa manager and what services are included?
Great content thank you! What is your opinion of building or buying a villa? Do you think building could be a cheaper option? (with the right contractor)
Thank you for the response. Last year I honeymoon in Bali which was our first time there. We spent time in Canggu and well as Ubud. We also did a day trip to Uluwatu. We’re looking for a 2 bedroom in the $250K USD price range. Someplace where we can spend several months out of the year and rent out out during our absence. Any recommendations on up and coming areas would be greatly appreciated :-)
If you like Canggu, that would be my first recommendation. Uluwatu has a couple of interesting up and coming areas, but I think investing there is more difficult than in Canggu, at least until the market there has grown and matured a bit more.
Thank you so much for your content! It’s been several months since I’ve been searching both the Bingin and Canggu areas for an investment Villa. I have been in touch with Properta Bali but was wondering if you recommend any other reputable realty companies?
@@villanomics I've been in contact with Balivestor. Are they any good? Seem to have some interesting options. I would be interested if you could make a video on building "standard template villas" vs. fully customized. I'm guessing that building one of their templates is cheaper, but your villa is then just one of many. Not sure how important that is for profitability.
I heard from real estate agent 15% management fee includes utilities, cleaning, booking etc. How did you calculate all those costs separate from what is already included in most management?
Ask your agent for the contact details and follow up with that villa manager. Getting a good service for 15% would be very unusual. Real estate agents making things look better than they are is not so unusual, however.
HI Mate, great video. quick question, is ir worth buying new leaseholds for 25 years and hold it for few years and flip it in Canggu hoping for a profit? or do people usually hold onto the full term and just rent it out and let it depreciated over time
Leasing land - especially for a medium duration - and not making use of it doesn't seem like a great plan. Of course it can happen that prices go up and you get more for the remaining years than what you paid for, but it does seem highly speculative and very risky, especially after the sharp increase of prices in the last years. More normal is to lease land to develop it.
