By Elly, IPA
Once you’ve chosen a property in Bali, the next question is: how do you make it work—not just look good on paper? In this blog we dig into rental-yield optimisation, management costs and real return.
Understanding yield vs ROI
Rental yield = annual rental income ÷ purchase price.
ROI (return on investment) = includes capital appreciation + rental income – costs. In Bali some sources suggest ROI of 10-15 % is more realistic for well-located properties.
Example: A villa bought for USD 300,000 with annual rental income USD 45,000 = gross yield 15 %. After say USD 10,000 costs → net yield ~11.7 %.
Key cost items to budget
Maintenance (pool, gardens, appliances)
Property management / guest services
Marketing and OTA-listing fees (Airbnb, Booking.com)
Taxes: e.g., for villas, Indonesian tax rules apply.
Vacancy and seasonal fluctuation
Tips to maximise income / yield
Choose amenities that attract guests: private pool, wifi, good design, strong reviews.
Use professional management to maintain guest experience and occupancy.
Combine short-stay and long-stay strategies (digital nomads + tourists) to smooth occupancy.
Monitor purchase cost and compare anticipated rental rate carefully. Just because “villa in Bali” has high demand doesn’t mean every villa is equal.
Possible pitfalls
High purchase cost means lower yield: a villa costing too much in a less-in-demand location may struggle to deliver target return.
Over-optimistic yield assumptions—some marketing pushes 20 %+ returns which may not reflect net reality.
Changes in regulation or tourism environment (e.g., global travel disruptions) can reduce occupancy.
Lack of exit market or liquidity: resale may be more difficult than you expect.
OPI's recommendation:
Set conservative assumptions: aim for net yield in the 8-12 % range in good locations (for short-stay villas). Ensure you model for 5-10 % vacancy, rising maintenance costs, management fees and tax. If capital appreciation adds upside then you get optionality. Always treat the purchase like a business, not just a “holiday home that will rent”
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