Leasehold vs Freehold - is a Villa in Bali a good investment?

In this video, I explain how the leasehold constructs that are common in many asian countries work and how to calculate if it is an interesting investment.
I explain the impact of inflation, how to compare a leasehold investment against freehold as well as more traditional investment options like savings account or mutual fund/equity investments.

Learn to compare leasehold vs. freehold deals and evaluate if a property investment is a suitable fit for you, using examples of common villas investments in Bali.

[arturgrabczewski]

Please note to get a return you are talking about, you don't need to buy this much land (we are talking about Bali of course). You will easily get away with half of the land or even less. After all, 1000sqm is really a lot by Bali standards. I would bring it down to 120k or less for the land. Also, the cost of building a villa for $200k seems very high.I would bring the cost down to no more than $270k in total and then do the numbers if this is a good investment Also note that when you buy a land in Bali you will have a chance to extend the lease of land for another 30 years at the market price.

[ICanThrive]

Does this mean that leasehold's can never be sold or passed onto another leasee after say 15 or 20 years?

If the lease was say 35 or 40 years, could it not be written into the leasehold contract that the property can be sold and taken on by another leasee?
Thank you for the very interesting information presented.

[orsonica]

Really appreciate your content, pls keep it up!! Just wondered if you thought there were additional costs to being a 'bule' when negotiating/purchasing materials etc? Bule pricea will hopefully not make too much of a dent in costs..

[nabiljaghdour]

but for freehold, land value cant stay at 300k only after 25 years, No ? land value has to increase. your thoughts ?

[HUGEMEOW]

We have looked at the construction of Villas in Bali. Any area like Bingin is seeing massive over construction thus leading to a coming collapse in return and foreign investment.There will be way more villas there than people than can fit in the place at this rate. They already have issues with water shortages and other restrictions will come.

[lukelucanus]

Great video but I would expect the freehold option to be far more profitable due to the appreciation in land value which is unaccounted for

[jamesmd]

So I have a quick question.
A friend of mine thinks they are making a good deal.
They have rented a villa for five years costing around 85, 000 euros.
The plant is to not use it personally but to sublet it via airbnb.
The places near Canggu, the location is very nice still a lot of nature around it.
It's a two bedroom place with a very big garden space and a very big pool.
Is the average rent is $200 a night and the average occupancy rate is 70%, they should make around 200, 000 euros over the course of five years. So basically they think they are making a profit of around 115, 000 euros. But surely I must deduct a lot of things, maintenance to the house, insurance, electricity, water, housekeeping, gardening, platform fees, and not to forget surely some kind of tax. It's hard to come by information on this kind of stuff but surely it's another 35%. If I deduct these costs and I'm sure it's probably a bit higher considering in the maintenance of the house I am left with around 1400 euros a month and a lot of work. What do you think.

[damsbylka]

Hi there

Is it safe to buy a land, build a villa or house and renting out during the 25years leasehold contract without pt pma. ( because i read pt pma required at least 10 billions idr investment)

No chance the owner will kick you out after 5years because of death, divorced or whatever reason ?

Thanks

[mrz]

You also need to take into account the fact that you can reinvest that 45k yearly yield into the stock market or another investment instrument and thus far beating the returns of just putting all your capital into the stock market

[Tokyo-Ville]

The 45, 000 return per year seems to be very high. Divided by 12 it makes 3, 750 a month. And the house must be rented 12 months a year probably in your calculation. Can you precise your methodology? I would see a simulation where you use the house 6 months per year for yourself and rent it, in low season, for 6 months. And as commented by someone else, only 300 to 500m2 of land would be needed and not 1, 000m2.

[FrancoGottardini]

4% in a saving account ? someone can explain it? In my country is from 0, 15% to maximum 1, 8%. There is really a country where your saving account yields 4% Where?

[keepitgreen]

Why is your assumption that the land value stays the same at 300k? Land values go up over time. Whereas with a lease you are left with no value at the end. At the end of 25 years freehold land should be worth close to your 7% equity return.