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How to prepare a villa for leasehold? You need to think of the 3 P's of preparation: pricing, purpose, and promise. Learn more about property leasing here.

Preparing a villa for leasehold takes more than just renovating and marketing. Even if your property will return to you, the thought of handing it over to a lessee for years can be a nerve-wrecking thought without adequate preparation.

Villa leasehold is a great way to earn passive income if you are a busy person. Unlike a landlord, you are not directly involved in the management of your villa. If you allow subletting, your lessee can become a landlord. They’ll manage the villa and collect rent from their tenants. You are still entitled to collect rent from your lessee on a yearly basis.

To explain how you can prepare a villa for leasehold, we will approach it from three different angles: pricing, purpose and promise.

Pricing

When you opt for a long term lease rather than a monthly or daily rental, you are going to have the inevitable opportunity cost of not earning income from the final tenant. Your lessee would need to be convinced that your villa will be profitable for subletting. This means you must lower the price sufficiently to attract potential lessees without compromising your villa’s buying price.

If you do not authorize subletting, then you can opt for a yearly rental at a higher price. You must be clear at the beginning on how much involvement you will have in the maintenance of your villa. This is explained further in the next point.

If you need help in determining the correct price of your leasehold property, don’t hesitate to contact our property agents.

Purpose

If you allow subletting, your lessee expects a lower price to be able to conduct a profitable rental business. An important note on subletting is that your villa must have the correct permits in place to allow for monthly rentals. Subletting for yearly rentals is another option for your lessee if you do not have the correct permits in place for short term rentals.

If you’re not comfortable with subletting, then a contract-bound agreement must be made between you and the lessee. Note that this arrangement is not common, and may discourage more people from leasing your property. Consult with our agents to create a satisfying agreement for both you and your villa lessee.

Promise

The last point is to highlight the importance of contractual agreements. Make sure both parties understand 1) how much are they involved in the property maintenance, 2) the boundaries of which the lessee can renovate and make improvements, 3) the type of rental business the lessee is able to set up, and 4) the payment for tax and permits if applicable.

Our agents can help set up 90% of the agreements at a small fee

At Bali Coconut Living, our property agents in Bali are tasked to help you to evaluate your villa, recommend the right pricing, to help you determine the possible legal uses of your villa, to protect your from shady lessees, to set up a clear contract and to attend at court meetings on your behalf, if any disputes occur.

Please don’t hesitate to ask about our villa management services.