Thinking about investing in Bali’s real estate?
That’s a great move! Bali is beautiful, and buying property there can be a smart way to make money.
However, figuring out the best way to do this can be tricky for people from different countries.
That’s where choosing a long lease comes into play.
I’ve looked into this and want to share why long leases are a top choice for foreign investors like you.
If you’ve been trying to figure out how to get the most out of a Bali villa investment, you’ve come to the right place.
We will explore five reasons why opting for a long lease is smart.
From avoiding complicated legal stuff to the chance of saving some cash, I’ve got the scoop to help you make a solid decision.
Let’s dive into how you can succeed in Bali’s hot property market, all while keeping things simple and straight to the point.
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What is a long lease?
In Bali and the rest of Indonesia, people from other countries can’t just buy land outright.
But, the government has made a way for these foreigners to still invest in property.
This method is called “leasehold” or a long lease.
Think of a long lease like renting a house or apartment for a very long time.
It’s an agreement between the person who owns the land (an Indonesian) and the foreign person who wants to invest.
How long will it last?
Think of a long lease as a long promise to stay in a place.
It can last 25 to 99 years, but most people from other countries pick something between 25 and 30 years.
The cool part is that, depending on your agreement with the property owner, you might be able to extend this promise even longer with an extension, in whatever years.
What can you gain from a long lease?
Usage Rights
During the lease term, the foreign investor can use and benefit from the property as if they owned it.
This includes living in it, renting it out, or even making renovations (subject to local regulations and agreements with the landowner).
Transfer and Sub-Lease Options
Investors may have the option to transfer their lease to another party or sublease the property, subject to the terms of the lease agreement.
Costs and Investments
1. No property taxes
Usually, when you own something like a piece of land, you must pay taxes on it every year.
But with a long lease, you don’t have to pay these taxes since you don’t own the land.
If any rules about money need to be paid, they will be written in your lease agreement.
2. Upfront payment
The lease is usually paid upfront for the entire term, saving you money each year compared to renting the land and paying every year.
Benefits of long-lease for foreign investors
If you’re looking to invest in Bali, understanding the benefits of a long lease can significantly influence your investment decisions.
1. Better ROI Compared to Short-term Leases
A long lease for your Bali villa offers a higher return on investment (ROI) than shorter rental agreements. Here’s how:
- Stability: A long lease ensures a stable income stream, avoiding the need for frequent tenant changes.
- Cost Efficiency: Long-term leases reduce expenses related to tenant turnovers, such as advertising and upkeep, thus improving your net income.
- Higher Rental Yields: With a long lease, villas can often secure higher rental prices, enhancing your annual ROI on the Bali villa investment.
2. Security and Peace of Mind
Many expats wonder about the safety of buying leasehold property in Bali. Here’s why it’s a secure choice:
- Legal Protection: Bali’s regulations offer strong protections for investors in leasehold properties, ensuring the safety of their investments.
- Success Stories: Numerous expats have found success and security in buying leasehold property in Bali, reinforcing the reliability of such investments.
3. Greater Flexibility in Property Usage
Investing in a villa with a long lease offers varied use cases:
- Personal Holiday Home: Use your villa as a retreat without the limitations often found with short-term leasing.
- Rental Opportunities: Generate income by renting out your leasehold property to tourists or as a residential space.
- Sub-Leasing Capabilities: With the right agreements, your Bali villa investment can be sub-leased, offering additional income streams.
- Prime Locations: Bali Villa Realty can assist in locating a villa in a sought-after area, maximizing the potential of your long lease investment.
4. Lower Entry Cost Compared to Freehold
Leasehold properties present a more accessible investment option:
- Lower Initial Investment: Buying leasehold property in Bali is generally lower than purchasing the freehold, opening the market to more investors.
- Broader Access: This affordability makes it easier for expats to enter the Bali real estate market, even with a smaller initial budget.
5. Potential for Appreciation and Lease Extension
A long lease in Bali offers significant growth potential:
- Appreciating Value: The historical trend shows Bali villa investments appreciating over time, suggesting a promising future for long leaseholders.
- Extension Opportunities: As your lease nears its end, you may have the option to extend, further securing your investment and its value.
Things to think about for foreign investors
Legal Advice
It is very important to talk to someone who knows the rules of long leases in Bali. They can help you understand all the small details and ensure you don’t encounter problems later.
Extension Terms
Before agreeing to a long lease, ensure you understand how to extend it. This is important because the land must return to the owner when your lease expires unless you’ve agreed to keep it longer.
Market fluctuations
Like any investment, the property market in Bali can fluctuate. Investors should conduct thorough market research to gauge the long-term viability of their investment.
Conclusion
Investing in Bali with a long lease is becoming key for smart investors from all over.
Bali is not just a beautiful place to enjoy; it also offers great opportunities to grow your money. With a long lease, you can enjoy the best of both worlds: making a good investment and having a beautiful place to visit or live.
Getting a long lease means you can have a steady income from renting out your place in Bali.
For anyone thinking about investing in Bali, getting a long lease is not just a good idea; it’s something you really should do if you want to be successful.
If you’re ready to enter the Bali real estate market but are unsure where to start, we’re here to help.
Our team knows about Bali and how to make the most of your investment.
Do you think a long lease in Bali sounds like a good plan for your investment?