4 Tips For Bali Real Estate Investors – First Timers And Veteran Investors Alike
Bali Property Report
Four Useful Tips for Bali Real Investment – Whether You are Just Starting Out or if You Have Been in the Game for Years
Proposal: In this article, you may learn a thing or two to assist you in preparing to invest in real estate in Bali. I intend to use real examples Click on the links to be redirected) to help you discover some of the nuances of our market that can create highly actionable real estate investment opportunities for beginners and veterans alike, including where to look, what to buy, and how to be successful in real estate investing.
During the real estate boom in Bali from 2005 through 2012, real estate investing has proven to be an incredible wealth builder for many? Hak Milik (“Freehold”) properties and Hak Sewa (“Leasehold”) investments have turned substantial profit for scores of investors who knew where the real tips and secrets of squeezing out that extra ROI percentage point or two lie. Proven investment strategies that have been employed for decades to diversify real estate portfolios, increase monthly cash flow, retire more easily and comfortably, and reach financial goals with more certainty.
One of the reasons real estate has been such an effective wealth builder in Bali is due to currency fluctuations. If for example, you purchased a villa in Seminyak in 2010 for USD 500,000, the rupiah value would have been IDR4.5M (Milyard or Billion). Allowing that the villa would have increase by only 3% each year, along with the rate of inflation, the rupiah value of the villa today is IDR 9.9M. More than double. Add to that you annual nightly rental business profit, and it is not too hard to see how effective Bali real estate can be in generating wealth.
Real Estate Investment Tip 1: Clarify Your Real Estate Investment Goals
The following nine questions will help accurately narrow down your goals, set realistic expectations, and keep you on track to make the right real estate investment choices.
- When do you plan to invest?
- Is the investment for personal use or for commercial purposes?
- Assuming that the answer to the question above is “A bit of both”, what is your ideal but realistic, expected rate of return?
- How much money are you willing to invest?
- Do you want to acquire property for future growth or do you need cash flow today?
- Do you want to acquire Hak Sewa or Hak Milik? Why?
- Will you make this acquisition under a local company name or in your personal name?
- Will you self-manage, or contract out the marketing, maintenance and management?
- Your finances: Do you intend to pay cash or will you finance the acquisition on the back of another asset(s)?
One option is to use an agent as your ‘buyer’s agent’. As inspections of properties these days are quite challenging for many and impossible for most, perhaps you and your agent can organize walk throughs of the vast range of properties on the market.Real Estate Investment Tip 3: Decide What Investment Property to Buy
You have asked yourself what type of property you want to purchase. Empty Land, Off-plan villa, a resale, Hak Milik vs. Hak Sewa, apartment. Which one is right for you?
4 Questions to Help You Decide What to Buy
The following questions can help determine your real estate investment purchasing strategy:
4. What is the best way to increase my net ROI on a leasehold villa?
Real Estate Investment Tip 4: 5 “To Do’s” Before Buying an Investment PropertyAt this stage in your Bali real estate investment search, consider these 5 tasks prior to buying any property. These 5 tasks are designed to help mitigate any associated risks, while simultaneously setting you up for real estate investment success and a higher ROI.
1- Request Inspections Before Buying
Diligent home inspections will alert you to any “red flag” issues. These issues are typically associated with repairs or renovations that might be more costly than anticipated. For example, the home inspection might show that the roof needs to be replaced or that there is too much moisture in the walls. These types of “red flags” are good indicators of a sound investment versus a high-risk investment. If the issues found during inspection aren’t enough to walk away, consider making a lower purchase offer.
2- Request an Appraisal
Property appraisals are incredibly helpful because they analyse the past, current, and predicted future value of the investment property; both the bricks and mortar and the performance as well. Without a full and reliable property appraisal you are left “guessing” what the property is worth.
3- Get umbrella insurance on your primary residence. Make sure it covers your investment property.
It’s no secret that accidents (and inevitably lawsuits) happen in life. Unfortunately, all too often accidents happen when property owners are not covered by an active insurance policy. Whether your tenant accidentally burns down the investment property or needs to be evicted for a lease violation, you’ll want to have additional insurance coverage on your primary residence, to protect your home in the event of a lawsuit.
4- Talk to your property manager before settlement to verify bookings.
No matter which real estate investment strategy you choose, make sure to speak with a local and trusted property manager before closing escrow. The property manager will typically have the calendar at his fingertips to lay out the likely cash flow model for the upcoming 12 months. In these times, you will know your break even costs and be better able to plot tenancy strategies.
5- Have at least 12-18 months of money reserves to cover possible vacancies.
Even the strongest real estate markets can take a dip or it’s taking longer than expected to return to our typical robust business. No matter the reason, by having at least 12 months of cash reserves for the property will protect you from defaulting on loans if you’ve leverages something else to buy this one. Additionally, these reserves will come in handy should any unexpected emergency repairs occur.