Every second Bali listing promises the same thing: 15 to 20 percent returns, 80 to 90 percent occupancy, passive income while you sleep. Then the owner opens their first annual statement and the number looks nothing like the brochure. This is the most common disappointment in Bali property, and it is entirely avoidable once you understand where the gap comes from.
Here is the honest version, with every deduction shown.
Gross yield is not what you keep
The headline yields you see are almost always gross. Someone takes a peak nightly rate, multiplies it by an optimistic occupancy, and divides by the purchase price. Nothing is wrong with the arithmetic. The problem is everything it quietly leaves out.
Gross yield is annual rental income divided by purchase price, before any costs come out. It is the biggest number anyone can honestly quote, which is exactly why brochures quote it. Net yield is what actually reaches your bank account after fees, running costs and tax.
Between gross revenue and the money that reaches your account sit four deductions, and they are large.
OTA fees. Airbnb and Booking take a commission on every reservation, commonly around 15 percent. That comes off the top before anything else.
Management fee. A managed villa pays its operator a percentage of revenue, typically 10 to 20 percent depending on the service level. Self-managing from another country is possible in theory and painful in practice.
Running costs. Staff, electricity, water, pool, garden, laundry, consumables, repairs. In a tropical climate with high guest turnover these are not trivial, and they scale with occupancy.
Tax. Rental income is taxed, and for non-residents the rate is meaningful. Ignoring tax is the fastest way to overstate a return.
Where every $100 of gross revenue goes
Illustrative. The size of each deduction depends on the specific villa, its management and your tax position. Stack them together and a gross figure that looked like 18 percent often lands between 6 and 10 percent net.
Rental income in Indonesia is taxable, and the rate for non-residents is set by the tax authority and changes over time. Do not model a deal on a listing's tax assumption. See the Directorate General of Taxes (DJP), and confirm your own position with a licensed adviser.
That net figure can still be a good return. It is just a very different number from the one on the flyer.
| The brochure says | The bank account shows |
|---|---|
| "18 to 20 percent return" | 6 to 10 percent net, after OTA fees, management, running costs and tax |
| "90 percent occupancy" | 60 to 78 percent as a full-year average, depending on location, quality and management |
| "Passive income while you sleep" | A managed operation with staff, guests, maintenance and a real cost line |
The occupancy trap
The second inflator is occupancy. A villa can hit 90 percent in July and August and sit far lower in the shoulder and low seasons. Promotional material quotes the peak. Reality is the annual average, which across much of Bali sits closer to 60 to 78 percent depending on location, quality and management.
If a seller will only show you high-season numbers, ask for the annual average. The answer, or the refusal to give one, tells you a lot.
How to judge a deal properly
Run every villa through the same honest filter.
- Use a realistic full-year occupancy for that specific area, not a peak figure.
- Use an achievable nightly rate for the season mix, not the best night of the year.
- Subtract OTA fees, management, running costs and tax before you call anything a return.
- Ask for real historical numbers if the villa is already operating, not a projection.
If the deal still works after all of that, it is a real deal. If it only works on gross peak numbers, it is a brochure.
How we know these numbers
The waterfall shows cents of every rental dollar, not one specific villa. OTA commission runs around 15 percent, management 10 to 20 percent, and running costs plus tax typically take another quarter, which is what turns a headline 18 percent gross into roughly 6 to 10 percent net. Occupancy ranges reflect full-year averages across Bali's main rental zones, not peak months. Every villa Premier models is costed line by line against its own historical statements where they exist.
Why we publish the smaller number
Premier’s whole position is that the honest number wins. An owner who buys on a realistic 7 to 9 percent net and then meets or beats it stays an owner and refers others. An owner sold a fantasy 18 percent walks away angry and warns everyone they know. We would rather show you the conservative case and let the villa outperform it than the reverse.
When we model a villa for you, we show gross, we show every deduction, and we show net, in USD with the IDR equivalent. If a listing cannot survive that breakdown, we tell you. The same honest math sits behind how management drives the return, how the remaining lease term affects value, and the after-tax number you actually keep on the way out.
A real number you can beat is worth more than a fantasy you will resent.
Premier Property Bali
- Gross is not net. Four deductions, OTA fees, management, running costs and tax, sit between the headline and your account.
- Expect 6 to 10 percent net from a villa pitched at 18 percent gross, and a genuine 7 to 9 percent net is a strong Bali return.
- Judge occupancy on the full year, not on July and August. Bali's realistic average is 60 to 78 percent.
- Demand a net figure in writing. A refusal is itself the answer.
This article is general information, not financial advice. Returns vary by villa, location, management and market conditions.
Want an honest, fully costed projection on a specific villa? Ask our team or explore investing with Premier.
Common questions
Is 6 to 10 percent net actually good?
For a lifestyle asset in a top global destination, a genuine 7 to 9 percent net with capital appreciation potential is a strong return. The problem is never the real number. It is the gap between the real number and the promised one.
Why do agents quote such high yields?
Because gross peak numbers sell. It is not always dishonest, but it is incomplete. Always ask whether a quoted yield is gross or net, and whether the occupancy is peak or annual.
Can I see real numbers before I buy?
For an operating villa, yes, ask for historical statements. For off-plan, insist on a conservative model with every cost shown. If nobody will give you a net figure, treat that as your answer.
