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Some people who are eligible to own a freehold property are still taking long-term leases, especially on properties in Canggu. Why is it a good idea?

Benefits of leasehold villas

Leasing is a strategy that many property investors use to enter the villa rental business without risking their money on one location or property. Some do so to test out the waters and to determine if the market rental price to leasing cost ratio offers sustainable profit in a certain location.

If an investor discovers that the earnings are smaller than they had expected, they are still able to sell their leasehold rights and look for other opportunities to deploy capital.

More benefits of leasehold villa in Canggu

Leasing gives more flexibility, not to mention liquidity as smaller up-front costs are incurred. While you are responsible for making minor repairs, you are not fully responsible for any damages to the property due to, for example, natural disasters.

Subletting leasehold villas is legal in Bali, provided that you have made an agreement with the landlord, and that the villa is certified as a holiday rental property. This gives you access to around 15% ROI. In fact, this is how many foreigners make their money in Canggu (and many other places in Bali), as they are not eligible to own land in Indonesia.

Some caveats of leasehold villa

The only caveat is that most leasehold agreements are paid in cash since it’s impossible to get a mortgage for leaseholds. This does not mean you cannot negotiate for payments in installments, although this may significantly impact your ROI.

Find a list of leasehold properties in Canggu

Bali Coconut Living is a property agent, consultant, and villa asset manager that seeks to benefit investors, owners as well as buyers. We offer an extensive list of both freehold and leasehold properties, such as the list of leasehold villas in Canggu.

Contact us for more information on exquisite property sales.