This is how much profit a Townhouse in Canggu makes: Efficient by pool management?
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- Опубліковано 31 січ 2024
- In this video, I analyse an investment proposal of a townhouse in Canggu, Bali. The property comes with a 28 years leasehold, furnished and will be ready to host guests on a short-term rental basis. Construction is nearly complete and it will soon generate return on the investment.
I calculate the expected revenue, expenses and profit, the investment yield and evaluate if it will be a lucrative investment.
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In this Title - Townhouse in Bali (1BR): real estate property investment analysis with Villanomics "Embark on a captivating journey into Bali's real estate scene with Villanomics! Join us for an in-depth investment analysis of a stunning 1BR townhouse. Uncover valuable insights, strategic tips, and the unique charm of investing in Bali's property market. Don't miss out on this exclusive opportunity - let Villanomics guide you towards making informed decisions in the realm of exotic real estate. Subscribe now and elevate your investment portfolio with the allure of a Balinese townhouse retreat."#balivilla, #villa, #investment, #property, #canggu, #townhouse
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Thanks a lot. Yes, makes absolutely sense. Probably also being "on scene" instead of doing things remotely. Really appreciate your videos!!
You're very welcome!
Thanks. That's super interesting. I am just getting started and got my first off-plan unit for Airbnb last year. Can you share more about how you do research? I have seen in previous videos that you are evaluating Airbnb rates. Is that all?
While I love the involvement, I start realizing that it is hardly scalable (timewise). Thus, this video is really interesting to consider pooling as a scalable alternative. Thanks!!!
If you want a hand-off investment, pool management is a very interesting option. Otherwise, your involvement should be limited after the first year or so. Evaluating Airbnb rates is one big component, but also comparison with similar objects and after all going there and getting an impression of the people you work with and the area you invest in. Critical thinking and common sense can save your money!
Deprecation lowers ROI quite a bit in your similar reviews. Why not create a PT PMA company and buy freehold? I have been checking the prices and have been quite surprised to see that difference in buying land freehold and leasehold was only 5-20%, depending on the property. But the depreciation does not happen and you can use it as collateral to get a loan.
What am I missing here?
From what I have seen, freehold costs roughly as much as 50 years of leasehold. But the more important factor is that foreigners - or companies with foreign ownership - are not allowed to buy/own land in Indonesia. The market for leasehold land is also much larger in Bali.
@@villanomics Thanks for the explanation, I had wrong information. I recently returned from vacation on Bali and fell in love with the country. I am considering to invest in Bali and you have some of the most useful videos. There's a few questions I have, that I haven't been able to find answers for. Perhaps you could point me in the right direction? I apologize for the wall of text.
1. I read this: "HGB titles are granted by the National Land Agency for an initial period of up to 30 years and are extendable for subsequent 20-year and 30-year periods. Upon the expiration of such extensions, a new HGB title maybe granted on the same land with the same terms."
So you can only extend once it has expired, right? This makes it quite unsuitable for mortgaging, as banks would want to have 30-40 years of lease after loan term.
2. I have not found any actual examples of how such extension is made. Is the price of the extension already stipulated when signing the initial leasehold agreement? Does it matter whether you have built property on it or not? If I paid 100k for the land, build a property on it, would the extension be 100k, 300k, or some variation of the 'land-only' adjusted value and how would such adjustment be made? I have trouble understanding what HGB applies to - is it only for the land, not the building? Does this mean that you have the right to demolish the building before expiration of the lease, or you are responsible to keep in good condition anything that you build on the land?
3. I know that Indonesian banks would not give loans to foreigners, but do you know are they approving business loans to foreign owned PT PMA's? Do you consider it possible to do all this while NOT being based in Bali? Or the business and the deals would simply not run well with remote participation? A benefit would be that my local bank could help with a business loan in such case, I believe. In one of your videos you did mention mortgaging, but I assume you are not able to use any of your Bali properties for that. Do you own a PT PMA, and if not, why not?
4. I assume that you would agree that buying through so called nominees is not advisable? I was told by some people (even while staying in Bali) that it's being done a lot, but reading how this works sounds quite dodgy to me and these contracts don't seem legally valid to me.
Hi trdi,
I’m glad you enjoy my videos!
Mortgages are rare in Bali, very hard to get, especially for foreigners. And even if you get one, the interest rates are so high that it might very well ruin the business case for your investment. I recommend to assume a full cash investment as far as mortgages are concerned; Of course you might use other credit facilities overseas if that makes sense for you. Business loans are also not an exception to this, meaning not a substitute for mortgages.
The prices for leasehold extensions are either fixed upfront(typically not for the distant future, but sometimes for the first few years), or (more common) the price will be fixed at the time of extension. This is done by getting two or.three quotes for comparable objects to evaluate the current market price and align to that. The deal itself is registered with a public notary and I recommend to discuss all your open questions with a legal professional at that time.
As for nominee ownership to circumvent the local law, I advise against it and I also do not see the point in it. You would not get legally protected rights of ownership if you obtain the rights in an illegal way.
Don’t be afraid of leasehold with a reasonable duration and if cash only investments are an option for you, there might be good opportunities for you in Bali.
Enjoy the journey!
Great advice🎉
Wouldn't a long term rental tenancy be better income than depending on daily rental?
Hi Roy,
I made a video comparing short term and long term rental in Bali:
ua-cam.com/video/pKz1tJC6qSE/v-deo.html
But the short answer is that long term rental is typically less profitable.