ROI Case Study: Investing in Bali Property for High Returns

The numbers below are an illustration built on typical figures for a well-located Badung villa. They are not a projection for any specific property, and they are not an offer. The point is the structure of the calculation and the sensitivity, not the headline percentage.

The property

• Three-bedroom private villa, established Badung location
• All-in acquisition cost: US$500,000
• Average achieved nightly rate across the year: US$350
• Target occupancy: 65% — about 237 nights

Gross revenue

237 nights × US$350 = US$82,950 gross. Note the average rate: high season carries far more than $350 and low season far less. Using a peak rate for all twelve months is the most common way these models are inflated.

Costs

• Management at 20% of gross — US$16,590
• OTA commission, net of direct bookings, ~8% — US$6,636
• Staff (villa, pool, garden) — US$7,200
• Utilities — US$4,800
• Maintenance reserve at 1% of value — US$5,000
• Insurance — US$1,200
• Regional accommodation tax and income tax — allow US$8,000

Total operating cost: approximately US$49,400.

Net

US$82,950 − US$49,400 = US$33,550, or a net yield of 6.7% on US$500,000. That is a solid, defensible return — and it is less than half what a lot of Bali marketing material advertises.

Sensitivity — what if occupancy is lower?

• 75% occupancy (274 nights): gross US$95,900, net roughly US$41,100 — 8.2%
• 65% occupancy (237 nights): net roughly US$33,550 — 6.7%
• 55% occupancy (201 nights): gross US$70,350, net roughly US$26,000 — 5.2%
• 45% occupancy (164 nights): gross US$57,400, net roughly US$18,400 — 3.7%

The fixed costs — staff, utilities, maintenance, insurance — do not fall with occupancy, which is why the yield drops faster than the revenue does. Any villa you are shown should survive this test at 55% before you take the 75% case seriously.

The part the yield calculation misses

Land appreciation. For many owners in established Badung locations over the past decade, the change in land value has contributed more to total return than the rent did. It is also the least predictable component, which is why we would rather underwrite a deal on the rental case and treat appreciation as upside.