You’ve probably heard the pitch,
“Buy this villa for $300,000 and earn up to 12% ROI annually.”
It sounds like a smart move, especially in Bali’s booming short-term rental market. But for many property buyers, that projected return remains just that — a projection.
The reality? Lower occupancy, hidden costs, poor pricing strategy, and months of underperformance.
Most investors don’t lose money because they bought the wrong villa. They lose money because they misunderstood what return on investment really means in Bali’s property landscape.
Are you confused about “Potential” and “Guarantee” Property ROI?
Most agents present best-case scenarios, not typical ones. A glossy brochure might show a villa earning $300 a night with 80% occupancy. That’s $7,200 a month. Sounds good. But what they don’t show is the average occupancy across the year, or the nightly rate actually achieved after discounts and seasons.
Cause: Assumptions Based on Top Listings
Buyers often use Airbnb or Booking.com to benchmark potential. They see top-rated villas charging $300 a night and assume that’s the norm.
What’s Missing:
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Most top-performing listings have years of reviews
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They often have professional photos, great locations, and reliable teams
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New listings need time to build ranking
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Price drops are frequent in low season (some villas go from $300 to $120 per night)
Mini Case: Someone wants to buy a property in Pererenan based on their ROI plan on one villa charging $320 per night. But they didn’t check its availability calendar. The listing was almost always full because it was managed by a top-rated Superhost with 300+ reviews.
When they launched their own villa at the same price, bookings trickled in. They dropped the rate to $180 to compete, and the entire ROI projection collapsed.
Trusting the wrong agent or partner in Bali can cost you millions. Learn how to spot real estate scams, fraud, and bad real estate deals before it’s too late.
What is True Cost of Operational Villa
ROI is revenue minus costs. Simple. But most people forget how many costs come into play — and how often they change.
Cause: Budgeting Like a Homeowner, Not an Operator
Most buyers budget for property tax, management fees, and some repairs. But that’s a homeowner’s mindset. Running a rental villa is closer to running a hospitality business.
What’s Often Left Out:
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Staff wages (cleaners, security, maintenance)
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Deep cleaning, repainting, wear-and-tear
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Guest amenities (towels, linens, coffee, bottled water, toiletries)
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Platform and channel manager fees (10%–20% cut)
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Internet and smart tech subscriptions
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Pest control, pool chemicals, landscaping
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Replacing broken things constantly: remote, fan, blender, umbrella
Mini Case: A Singaporean owner bought a villa in Bingin expecting 10% ROI. Their first 6 months were strong until maintenance started piling up — a leak, mold issues, kitchen drain backups.
Meanwhile, their reviews dropped due to slow response from the manager. They replaced the team, spent $5,000 on fixes, and watched their net return drop to under 4%.
Are You Using Smart Pricing or Just Copying the Competition?
A well-priced villa in a mid-tier location can outperform a poorly priced one in a premium zone. Yet many owners just copy prices from similar-looking villas without understanding booking behavior.
Cause: No Dynamic Pricing Strategy
Static pricing leads to low occupancy or underpriced nights. Dynamic pricing adjusts based on demand, seasons, and booking windows.
What Happens:
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You lose high-value bookings during peak season
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You miss filling calendar gaps during low demand
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Competitors with smart pricing eat your market share
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Your reviews stay low because you’re getting the wrong guests at the wrong price
Mini Case: A couple launched their villa in Cemagi at $275 per night year-round. They didn’t get many bookings. Meanwhile, a competitor next door used dynamic pricing and booked weekends at $300, weekdays at $200, and filled empty weeks with promo deals. They had 40% more occupancy over the year.
What’s the Differences between Gross Property ROI and Net Property ROI?
Many reports and calculators only show gross ROI, which is income before any deductions. It’s like celebrating your salary without looking at taxes, rent, food, and bills.
Gross ROI Calculation (Example):
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$300/night × 20 nights = $6,000
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$6,000 × 12 = $72,000
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$72,000 / $400,000 = 18% ROI (on paper)
Reality After Costs (~40% deduction):
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Net income = $43,200
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Net ROI = 10.8%
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Now factor in loan interest, upgrade costs, and management downtime. You’re closer to 6–8%, or less if occupancy dips.
What’s the Lesson?
Always ask: Is this gross or net ROI?
If it’s gross, treat it as fiction until you run your own numbers.
Does Your Villa Actually Stand Out in a Crowded Market?
If your villa looks like every other “modern minimalist” box in the area, you’re in a price war. You’ll spend more to stand out or discount to compete. Either way, your ROI bleeds.
Cause: Overdesigning for Instagram, Not for Guests
Investors often build for aesthetics instead of function. Many of these villas:
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Lack privacy
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Have bad lighting or echoey sound
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Don’t work well for families or remote workers
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Look great in photos but feel empty in person
Mini Case: In 2023, a batch of near-identical villas launched in Kedungu, all using the same floor plan, furniture supplier, and marketing angle. By 2024, occupancy fell across the board because travelers stopped clicking. Only the ones with unique selling points (like outdoor bathtubs, dedicated workspace, or on-site staff) kept up performance.
Many villas in Bali lose value because of overlooked maintenance. Discover how neglect affects your property’s resale and what to do before it’s too late.
Is Your Management Team Aligned with Your Guests’ Expectations?
Even a good villa fails if your management doesn’t match the service level your guest expects. Mismanaged villas get bad reviews, fewer bookings, and higher refund rates.
Cause: Hiring the Wrong Team, or Going DIY
Some owners go for cheap managers. Others try to self-manage remotely. In both cases, guest experience suffers.
The Symptoms:
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Late replies to inquiries
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Poor cleaning standards
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No check-in support
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Slow response to issues
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No pricing optimization
For an insightful article, maybe you want to read this piece about how to recruit a reliable staff for your villa.
Mini Case: A Hong Kong investor hired a solo manager who also handled 15 other units. Their villa had one bad guest experience, then three more. Reviews dropped below 4.5 stars. Bookings dried up. Recovery required rebranding, relisting, and overhauling staff, a process that took 6 months.
Final Thoughts: Is ROI just An Empty Promise?
Too many investors think ROI is a guaranteed number — buy a good villa, post it online, and the money rolls in.
But real ROI is earned, not promised. It depends on smart pricing, great service, clear positioning, and realistic cost planning.
If you treat ROI like a moving number — one that requires tracking, adjusting, and improving — you’ll avoid the traps that most investors fall into.
