Hi, I’m Adiel! Having spent countless hours researching the real estate investment environment in Bali and get to know property investors and owners during my time at Bali. I’ve received countless inquiries from property owners and investors all over the world each seeking clarity on the intricacies of investing in Bali.
In this blog post, we’ve distilled the wisdom gained from our experiences, compiling some of the most frequent and pressing questions raised by property investors. Our CEO, Jing Cho Yang who has 15+ years of experience in the hospitality industry and property management, answers some frequently asked questions of January.
Join us as we unravel the mysteries and provide valuable insights to guide you through the nuances of investing in Bali real estate and starting a rental property business!
Table of Contents
Common Questions To Start Rental Property Business
Should I have a PT PMA if I work with you?
No, it’s not obligatory for expats to register a PT PMA (foreign-owned LLC) to work with us. While not mandatory however, it offers a secure option for foreigners to own property, utilizing local nominees or a local company.
PMA, or “Foreign Capital Investment,” denotes companies fully owned by foreign investors, adhering to Indonesian laws. As a foreigner, land ownership is restricted, but acquiring Hak Guna Bangunan (Right to Build and Own) enables constructing and owning a building on leased land, though not the land itself.
Discover the legal and steps to invest and buy property in Bali
What tax and percentage do I need to pay?
As a property owner in Indonesia, it is important to understand the tax obligations associated with renting out your property. There are several taxes you need to take account of:Â
The land and building tax, or Pajak Bumi dan Bangunan (PBB), is a state tax and Indonesia’s most basic property tax. Individuals or entities who pay for the PBB have the right to the land in terms of land control, land ownership, etc.
Property is evaluated in two ways: first the land is valued, then any development that is present on that site is appraised. Property taxes are consequently determined on both the land’s valuation and any buildings that could occupy it.Â
Rental property tax is a tax that is imposed on property owners in Indonesia who rent out their property to tenants. The tax is calculated based on the rental income earned from the property.
Rental property tax in Indonesia is calculated based on the gross rental income earned from the property. Rental income or Lease Tax is levied in the amount of 10% of the Lease Value for tax residents in Indonesia. For non-tax Residents the Lease Tax due is 20% of the Lease Value.
For example, if you earn a gross rental income of IDR 100,000,000 from your rental property, your rental property tax would be IDR 10,000,000.
Where is the best area to invest in Bali
Our team of data scientists and analysts collects and analyzes thousands of rental property data points from OTAs (e.g., Airbnb) to determine the popularity of a location relative to all other potential properties in the area that a guest or homeowner might consider. This includes review ratings, counts, prices, occupancy, and potential ranking. We then plot this data on a heat map to identify specific grade areas based on our analysis.
With the help of our data scientist team and offline canvasser analyzing and observing data trends, we’ve discovered the top areas to invest in Bali property, such as : Uluwatu, Canggu, Mengwi, Bingin, and Ubud. Canggu for example, due to its vibrant culture, stunning natural scenery, and world-class surfing spots, has seen a growing popularity and increasing demand for property, becoming a hotspot for real estate investment. This trend can be seen elsewhere in Bali such as Bingin, Ubud, and Uluwatu, where rising popularity from tourist, new development projects, and easier infrastructure access results in growing land prices and new area for investment.
How to find property/land to buy & sell?
Our community experts of real estate service company can help you with high-quality service with respect to the purchase, sale, lease, rental, or appraisal of real estate property. In helping you decide to choose the right property and land to invest, we also provide an appraisal service and revenue forecasting that is unbiased using data.Â
By utilizing a machine learning model and comparing to nearby properties, our team of data scientists will analyze the distinct characteristics of your property or land and provide a concise valuation and return on investment (ROI) projection. As well as valuable market insights to help make informed decision-making in the real estate realm.
What's the range of price for a property sold or build in a certain area?
As Bali is a large and emerging region for investment. Each region or area has different prices due to its popular area for tourists and rising land price. With the help of our community experts of real estate service partners, you can find out each areas potential price of property or land. And receive personalized consultation and appraisal service from our data scientist to determine it’s real value.Â
What are some of the legal requirements & permits needed?
Navigating the construction legal requirements in Bali is crucial for any investment and development project. Thankfully our professional network of legal advisory service offers in-depth insights into the legal nuances of acquiring and investing in Bali. Some of the permits or license to rent property include :
- Persetujuan Bangunan Gedung (PBG) : A permit granted by the local government or central government to owners for building new structures, changing, expanding, reducing, and/or maintaining existing buildings in accordance with applicable technical standards.
- Sertifikat Laik Fungsi (SLF) : A certificate granted by local government or central government to declare the proper function of the building before the building is used.
- Building Permit (Izin Mendirikan Bangunan or IMB): This permit is required for any new building construction or renovation work. It is issued by the local government and ensures that the building is constructed according to the approved plans and meets all building codes and regulations.
- Property Ownership Certificate (Sertifikat Hak Milik): This certificate proves that the landlord or property owner has legal ownership of the property.
- Tax Identification Number (Nomor Pokok Wajib Pajak or NPWP): Landlords must obtain an NPWP from the tax office to pay taxes on rental income.
- Business License (Izin Usaha): A business license is required if the landlord or property owner is renting out more than one property or if the rental income exceeds a certain threshold’s.
Our legal advisory service and real estate partners can help you find and acquire your dream propertyÂ
What are some of the design recommendations
Bali is emerging as a center for innovative interior design. The trend of Bali-inspired interiors has surged, defined by a creative blend of natural materials, rustic elements, and a harmonious indoor-outdoor integration. Our community experts of interior design service partners has shared with us some of the trending interior design that has attracted tenants and guests.Â
Some of the design trends include blending natural materials, bohemian flair, Balinese art, and minimalism for a serene home ambiance. Whether in Bali or inspired by its culture, these trends enhance beauty, functionality, and can attract potential guests to your rental property.
What is the average ROI?
ROI, short for Return on Investment, is a vital metric providing insights into the annual returns an investor can expect from a specific area. Various factors such as land price, operational costs, villa prices, and occupancy rates directly impact this percentage.
With the island’s booming tourism industry promises a compelling return on investment. Properties appreciate steadily, offering a lucrative financial growth opportunity of around10-30% ROI. If you’re keen to unravel this financial puzzle, our investment strategy and appraisal service can help determine your investment project ROI.