Secrets to Maximizing Rental Property Investment Return in Bali

Do you want to maximize profits from your rental property in Bali?

Bali is a beautiful island that many tourists love to visit. In 2023, the island saw a 300% surge in tourist arrivals. This boom presents a golden opportunity for smart real estate investors.

However, it’s not as simple as buying a property and waiting for the bookings to roll in. 

You need to make the right choices to maximize your rental income.

In this article, I’ll reveal the secrets to maximizing rental profits in Bali. I’ll explain the key factors that impact property prices and demand. Finally, I’ll outline ways to start a successful rental property in Bali. 

Let’s dive in!

Rental property investment strategy

Real estate investing is one of the safest investments out there.

It’s because the prices will increase and the property’s tangibility. 

Bali has become one of the most affordable and profitable property investments for local and foreign investors alike.

But navigating property investment, especially your rental property, can be complicated. 

You want to find a desirable location year-round, like Canggu Seminyak, Uluwatu, or Ubud. It will increase your ROI and occupancy rates. 

Although there is no high or low season in Bali, some months can bring higher than the rest. 

You need to understand the seasonal demand to set the price correctly. 

Seasonal Demand

Two main seasons in Bali affect how many tourists visit. 

The high season brings many tourists from July to August and around Christmas/New Year. 

During these times, there is high demand for rental properties like villas and guest houses. Property owners can charge higher prices and get more bookings.

The low season is from January to June and October to November. 

Fewer tourists visit Bali during these months, so there is less demand for rental properties. Property owners have lower occupancy rates and may need to lower their prices to attract guests.

In the end, whether it is the busy high season or the slower low season in Bali, the number of tourists greatly impacts real estate prices. 

More or fewer people want to rent properties, which changes the demand. Using real data analysis tools is very helpful for investors looking to make smart choices. 

That’s why you must work with an expert in the real estate market in Bali, like Ilot Property Bali. 

Our competent team will provide important information and insights about Bali’s unique real estate market. With this data, investors can make the best decisions, whether in the high or low seasons. 

Rental Property Strategies: 5 Tips to Drive More Profits

Let’s look at some rental property strategies you should follow to help you drive more rental income.

Tips #1: Know your target market.

The main reason for investing in real estate is to make money. Now, with rental property, you aim for a longer investment term.  

That’s why knowing your target market is essential.

First, check what kinds of jobs are available nearby. 

If there are many good job opportunities, more people may want to live in that area. However, fewer people may be interested in jobs that are hard to find.

Next, consider the costs of living there, such as housing, food, utilities, and transportation. 

An area with lower living costs could attract more residents, while high costs may make it less appealing.

You’ll also want to know how much money families typically earn each year in that location. 

Areas with higher median household incomes often have more demand for housing.

Additionally, pay attention to whether the local economy is growing with new businesses opening up or shrinking with companies leaving. A booming economy usually means more people moving in.

Another important thing is… 

Tips #2: A great location 

Why is it important?

Apart from giving you higher occupancy rates and, thus, better ROI, a great location also ensures your property is closer to attractions, such as beaches, restaurants, cultural landmarks, hospitals, or beach clubs.

This makes you attract more potential renters with more conveniences you can offer them. 

Tips #3: Property management 

If you’re like other investors who don’t reside in Bali, working with the right property manager is essential.

Especially if you rent your property on Airbnb with daily rentals, you have to ensure the hygiene of the furniture is right in place. 

You don’t want your visitors coming to your property with unorganized space. It’s also important for them to leave a great review online. It is what makes your property stand out from others. 

Tips #4: High-quality design and construction

A high-quality design and great materials will set you apart from others. 

For better ROI, you must ensure your building’s durability and longevity for up to 10 years. 

This helps you avoid future costs, like spending more on renovation in shorter years. That’s where well-versed builders come into play. 

Having a great design, something that future renters or buyers will want, is also essential.

Based on our experience, a luxurious property with more rooms and a luxurious design brings more visitors than an ordinary-looking one. 

That’s why you can aim for real estate with 5-6 bedrooms, some places catering to family and solo travelers. 

With the increasing number of online workers, having a private space for work is also a good idea. It will make your property more appealing to your target market. 

That’s why working with highly skilled architects who can help you build high-end villas is important. 

Tips #5: Legal documents

Foreign investors need the right documents if they want to rent out properties to visitors daily in Bali. Here are the important papers they should have:

1. Valid passport and visa 

Foreign nationals must have a valid passport and the proper visa to operate a business like daily rentals in Indonesia legally. Some good visa options are a retirement visa, a social/cultural visa, or setting up a foreign investment company.

2. Tax numbers 

Foreign owners renting properties daily need to get an Indonesian tax ID number (NPWP) and a VAT tax number (NPPKP) to properly pay taxes on the rental income they earn.

3. Building permits 

To operate lawfully, owners must have legal building permits (IMB) for their rental villas/properties.

4. Ownership documents 

They need proof that they legally own the property, like land certificates (SHM or Hak Pakai) and sale/purchase deeds.

5. Follow zoning rules 

The property must follow the local zoning laws that allow villa rentals in that area.

6. Tax receipts 

It is important to keep proper receipts and records related to their rental income.

Having all the right legal documents and licenses protects foreign investors and keeps their Bali daily rental business legitimate under Indonesian laws.

There are two ways you can start for your rental property.

Rental property can be lucrative, especially if you do the right thing. 

There are many ways to improve your rental property, which I’ll outline below, but first, I want to outline the two best ways you can start making your rental business in Bali a reality.

1. Buy a ready-built villa.

Now, there is some caveat to this…

Buying a ready-built villa, especially in a high-end location that guarantees consistent rental income, will cost more upfront than the less preferred area. 

You can check our villa listings here if you want to invest in a more affordable property close to Bali’s great location. 

Alternatively, you can contact us at office@ilotpropertybali.com if you need help negotiating the price with the property owner without actually being in Bali.

2. Build your property from scratch.

Buying your property from scratch is cheaper than the first option. But it’s only for you if you want to wait patiently to reap the results. 

There are steps, from construction to furnishing, etc., before you can rent your property. 

But it’s the best choice for the first investor in Bali because you can see the whole process…

Get your foot in Bali’s real estate market in terms of its market, and still with more affordable entry cost. 

Feel free to discuss your vision with one of our real estate experts. They are ready to answer all your questions about building your villa from scratch.

What to do next?

Bali’s rental market is becoming increasingly popular, so investors need to carefully study occupancy rates, seasonal trends, and target demographics. 

To stand out in the market, you must work with a team that knows the ins and outs of the Bali real estate market. 

With 12+ years of experience and hundreds of villas built in Bali, Ilot Property Bali can help you find a highly profitable land, design and build a villa, manage it, and market it.

If you want to rent a successful property in Bali and achieve high ROI based on real property data, contact us at office@ilotpropertybali.com or book a free consultation here.

Conclusion: The Path to Rental Success in Bali

Investing in Bali’s real estate can be very rewarding if you choose smart strategies and learn as you go. Bali offers great chances to make money from rental properties because many tourists love visiting.

But you need to do more than just buy a property. Your villas must be in great spots and look nice, so more people want to stay there. 

And to make the most money, the key is choosing the right strategies and fine-tuning your approach to the demands of future renters.

By trying small changes and seeing what works, you can get good at making your property earn more money. 

Do you own property in Bali yet? What obstacles do you face right now?