You have a number of choices and each of these options has its own pros and cons. Each of the following sections suggests things you might consider:
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1. Buy an existing stand-alone villa
The major advantage of buying an existing villa is the 'what you see is what you get'. You can evaluate it against your needs and expectations, from its liveability, aesthetic and design qualities, and its potential for rental returns.
If it has already been successful on the rental market, you will enjoy almost immediate rental demand and return on your investment.
A villa that already has a rental history is much simpler to evaluate both in terms of its costs and its actual earning potential than and when villas are new – they often take several years of careful management and marketing stewardship before they start to achieve their true return potential.
Prospective purchasers need to review a property's rental characteristics and history carefully. Staffing for example. If the property you are looking at was only occupied occasionally by its previous owners, or only offered for rental once in a while, you may find that the service standards offered by the staff may have fallen to an unacceptably low level.
And while, at any one time, there are distinctive and really attractive villas and houses on the market, there are also a large number which fail to meet our high standards.
In our opinion, many older villas fall below our minimum standards of construction or design or require too much renovation to make them a worthwhile purchase.
Construction materials and techniques have improved so much over the last several years that many villas built five years or more ago simply do not compare with those built more recently. We do not reject an older villa out-of hand, but we would urge a prospective customer to commission a comprehensive construction survey before committing to purchase an older style villa.
Finally, don't be misled into thinking that the only properties available for sale are those you see listed on the internet or featured in real estate company's display windows.
There are always a number of extremely desirable, top-end villas that are discretely offered for sale by personal introduction only. We always have a number of such properties, so please don't hesitate to make direct contact with us.
2. Buy within an estate, existing or off-plan
Many villas are part of estate developments, rather than stand-alone properties.
This means that they are one of a number of other villas which share certain facilities and services in common. These might include room service, restaurants, car parking, security, housekeeping, maintenance, and recreational amenities such as tennis courts, spas, and beach clubs.
Established estates are popular with many purchasers because their operational management companies are experienced and both service and financial histories are established.
In addition, operational costs, which the purchaser pays for on a periodic basis, are lower because of the economies of scale afforded by shared services, which tends to increase a given villa's rental yield.
What's more, an experienced, effective management company can add significantly to the purchaser's return on investment through a proven marketing structure to attract paying guests to the estate. However,take into consideration that you are often limited to using only the estate management company and you could be inhibited if that management company is not effective. Even if you have the freedom to rent out on your own or with other management, rental agents generally do not wish to market only one villa within an estate, as they lose repeat business by guests booking through the estate directly.
There are a number of advantages to buying off-the-plan, which means buying a property from the architect's plans, artist's impressions, or by viewing a 'show villa.' These include being able to take advantage of lower prices which developers quote in the early stages of a development, and that your payments can be spread over the period of construction.
However there are some potential pitfalls which you should be aware of and guard yourself against. You need to be satisfied that the developer is reputable and experienced, and has a history of successful completion of similar projects in Bali.
You also need to ascertain who owns the land, and what security you have. Reputable developers will own the land themselves and your deposit and subsequent payments will be secured against the land.
Your payments will be tied to certain stages of construction, so you must ensure that an independent, third party project manager confirms that each stage of construction has actually been completed satisfactorily before you make progress payments.
3. Buy land and build your own villa
It is always worth considering buying land and building your own villa. However this choice comes with costs not found in other options.
The main advantage of building yourself is that you get a lot more flexibility in both location and in design.
By finding your ideal piece of land – cliff-top, beachfront, on the edge of a dramatic gorge, or overlooking rice fields – your dream home will have the setting you desire.
Buying land in Bali can be a relatively straightforward process if you deal with a reputable real estate agent and legal advisor. The most important thing is to obtain unbiased, professional third-party advice from a notary who is not connected to the vendor. The Notary will check title, building regulations and other matters to ensure the property is as represented by the vendor. When the time comes to draft a purchase agreement, you will also need to engage an independent legal/financial advisor to ensure your interests are fully protected.
Building yourself gives you a very high degree of design freedom, allowing you to create the environment you want to live in and enjoy. You're not buying someone else's idea of the perfect villa.
While there is some bureaucracy in relation to obtaining building permits, just like everywhere in the world, once zoning is clear, building by-laws in Bali confine themselves mainly to limitations on height.
If you have plans to rent when you're not in residence yourself, you may want to consider some of the design factors which will enhance your property's rentability and resale value. These are discussed in the 'What makes a good rental villa' section on our website.
Some might find that building themselves has a downside, not least of which is the time it may take until completion. Designing and constructing a villa, even with the best specialists in their fields is a laborious process. It is our experience that the average three-bedroom villa takes 18 – 24 months from initial surveys through to completion.
Unless you are on the island for the duration of the construction, you will find the pace of building slowed by a succession of small decisions which the contractors will expect you to make. If you are absent, work may grind to a halt, or worse, expensive mistakes may be made. To avoid this problem, you will need a competent project manager.
When you build and construct your own villa you will need to hire the following specialists – architect, structural engineer, electrical engineer, and a contractor. For larger villas you may also need a quantity surveyor, landscape architect, interior decorator, among many others. Just remember, each one of these comes at a cost.
4. Buy land purely for investment purposes
Owning and trading in undeveloped land in Bali is attractive for many reasons. Land values, in a historically cash market have never suffered from the housing bubbles witnessed in more economically advanced countries. Also annual land taxes are generally very low compared to other countries, and taxes on transactions are also very reasonable.
Purchasing vacant land requires a keen understanding of the importance of location, development trends, and local conditions.
Beachfront and cliff-top land are always winners, as are high-demand districts such as Canggu and Berawa. The coastal side of the main roads running from the south along both the east and west coasts is always more valuable than the other side. However finding desirable freehold property is becoming increasingly difficult close to the tourist nexus of the south.
Buying land has its own peculiarities which require the assistance and guidance of an experienced and transparent advisor.
For example, there are swathes of Green Belt or 'prohibited development land' which can be sold but not built on; individual communities have certain customary rules about building near temples; family-held land might have multiple titles; some family members might want to sell while others might not.
Elite Havens urges you to make use of professional and reliable legal advisors and notaries who can help you through any prepurchase due diligence process.