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If you have a villa in Bali, there are generally two ways of utilizing it as an investment property: short-term or long-term villa rentals.

Renting out your property may be profitable, but also requires time and effort. Before investing in properties, there are several differences in short- and long-term villa rentals that you should understand. If you’re thinking of real estate investment, and in order to meet your investment goals, we advise you to understand the differences and the opportunities in purchasing a villa in Bali.

Duration

How long is considered short-term villa rental? Generally, rentals under 6 months are typically defined as short term. However, short-term rentals can last from one night up to a few weeks. On the other hand, when you opt for long-term rentals, you can choose to bind your tenants into a 6 or 12-month contract.

Potential for profit

To determine whether you want to rent your villa short-term or long-term, you must first analyze its potential for profitability.

Short-term rentals may have a higher potential for profit, as you can rent out your villa multiple times during high season and also have the possibility of increasing your rental fee. However, short-term rental may not be as popular for the remaining part of the year, possibly leaving your villa without a tenant.

On the other hand, renting your property long-term may generate a steady rental income, although it may be lower in amount. Overall, long-term rental may give you higher annual profits compared to short-term rentals.

Villa location and seasonality

The location of a villa is an important aspect to be considered. Villas located in popular areas such as Seminyak or Canggu may have higher performances during the high seasons. Short-term rentals will highly depend on location and seasonality. Villas located near beach clubs or entertainment venues can be rented out for a higher price if a huge Bali festival is taking place.

Villas situated a bit farther form popular tourist destinations are less likely to be affected by Bali’s holiday seasonality, which is great for long-term villa rentals. They are more stable and give you a steady income throughout the year. However, despite its location, long-term rentals are always in demand, making it a more solid investment opportunity.

Managing your short-term and long-term villa rental

Both short-term and long-term villa rentals require villa management service and marketing. Managing short-term rentals actually demands more time and effort as you will need to screen tenants, maintain and tend the villa, etc.

To help manage your villa rentals, you can use Bali Coconut Living’s villa management service. Save your time and energy and let us do the work for you!

Contact Bali Coconut Living for more info.