How much should you actually pay for a Bali villa?

Most buyers start from the asking price and ask whether the yield is acceptable. Reverse it: start from the return you require and calculate what price delivers it.

That number is your ceiling. Everything above it is someone else's margin.

The method

1. Establish realistic revenue. Achievable nightly rate at honest full-year occupancy. Not the seller's figure, the area's.

2. Subtract every cost. Platform commission, the 10% regional tax, management, staff and running costs, refurbishment reserve, income tax.

3. Decide the return you need. For an illiquid foreign asset with legal and currency risk, wanting 8–10% net is not greedy. It is priced for the risk you are taking.

4. Divide. Net profit ÷ required return = the maximum total capital that works.

5. Subtract everything that is not the purchase price. Transaction costs around 7%, furniture and setup, any build or renovation. What remains is the most you can pay.

The calculator does steps 1 to 4, adjust the price until the net yield reaches your number.

On a lease, add the step everyone skips

A leasehold consumes its premium. To compare it honestly against a freehold, either:

• Require a higher net yield to compensate for the asset ending, or
• Use the return after amortisation as your decision figure

A 20-year lease and a 40-year lease at the same price are not the same purchase. The shorter one needs roughly double the annual return to stand level.

What justifies paying more

• Genuinely scarce zoning where supply is constrained
• A long remaining term or a strong, priced extension right
• Full permits already in place, PBG and SLF issued, not pending
• An operator classification that lawfully covers nightly rental
• Land in a corridor with a concrete infrastructure catalyst

What justifies paying less, or walking

• Missing PBG or SLF, where legalisation takes 8–12 months and may not be possible
• Short remaining lease term
• Zoning that does not permit the intended use
• Any structure relying on a nominee arrangement
• A projection that only works above 70% occupancy

The negotiating position this gives you

"Your asking price implies a 2% net return once amortisation is included. I need 8%. Here is the working." That is a specific, checkable argument.

Sellers discount for a reason, not for a feeling. Bring arithmetic and you will find out quickly whether there is room.

Value the parts separately

Land. Establish the price per are for comparable, similarly zoned land on the same road, from transacted evidence rather than listings. Multiply by plot size.

Building. Estimate what it would cost to construct this villa today, then depreciate it for age and condition. In this climate that depreciation is steeper than most buyers apply.

Fit-out and furniture. Short-lived here. A four-year-old fit-out is much closer to replacement than to new, and should be priced that way.

Income. Only what the property can lawfully produce, given its licence position. An unlicensed villa's rental income is not a valuation input, it is a liability.

Add the first three, sanity-check against the fourth. Where the asking price sits far above that total, ask what is justifying the gap.

Leasehold changes the arithmetic entirely

A leasehold villa is a wasting asset. Its value should decline as the term runs down, steeply toward the end, and the extension clause determines how steeply.

Buyers regularly pay near-freehold prices for leaseholds with a third of the term already gone and an extension clause that says "at market rate". That combination is the single worst value proposition commonly available in this market.

Why asking prices run high

Listings cost the seller nothing to maintain, so they sit and drift upward. Agents quote asking prices as comparables because those are the numbers they have. The result is a market where the visible price level is set by properties that have not sold.

Ask what actually transacted, and have your notary confirm it against the deeds.

The negotiation levers that exist

• Remaining lease term and the quality of the extension clause
• Missing or incomplete PBG and SLF
• Absent or non-transferable rental licence
• Age of fit-out and imminent refurbishment
• Time on market, which is public information if you ask
• Access road width and any unregistered right of way

Each of these is a real, quantifiable deduction. Sellers price as though none of them exist, and buyers who have verified them negotiate from evidence rather than from feel.