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The investment process in Bali explained

Tuesday, Sep 17

Buying a property in Bali is still a great investment decision.

Tourism continues to increase yearly, with most tourists prefer staying in private villas rather than hotels.
*(Booking.com & AirBnb.com)

Trip Advisor has named Bali the world’s number-one destination for several years.
*(2nd place 2022)

Processes

Investment research

The investment research process for a villa in Bali typically involves the following steps:

 

♦ Market Analysis:
Study Bali’s property market, tourism trends, and popular locations for investment (e.g., Seminyak, Canggu, Ubud).

♦ Budget Planning:
Define your investment budget, including acquisition, legal, and operational costs.

♦ Legal Considerations:
Research ownership structures for foreigners (leasehold, nominee arrangements) and Indonesian property laws.

♦ Property Search:
Engage real estate agents or online platforms to identify potential villas in prime rental or growth areas.

♦ Due Diligence:
Investigate property titles, zoning regulations, land use rights, and any outstanding legal issues.

♦ Cost-Benefit Analysis:
Estimate potential rental income versus costs such as maintenance, taxes, and management fees.

♦ Risk Assessment:
Identify risks, including currency fluctuations, legal challenges, and market saturation.

♦ Professional Consultation:
Seek advice from local legal experts, notaries, and property consultants.

♦ Site Visits:
Conduct on-site inspections of shortlisted properties to assess quality, location, and market appeal.

♦ Exit Strategy:
Plan for potential resale, long-term leasing options, or alternative exit routes.

Real estate documentation

The real estate document-checking process typically involves the following steps:

♦ Ownership Verification:
Verify the property’s ownership through official land certificates (Hak Milik or Hak Pakai).

♦ Land Title Review:
Confirm the land title is valid, ensuring it matches the legal property description and boundaries.

♦ Legal Status Check:
Ensure the property complies with zoning laws, building permits (PBG), and land use regulations.

♦ Encumbrance Search:
Check for any liens, mortgages, or legal disputes attached to the property.

♦ Tax and Fee Review:
Confirm current property tax payments and verify any outstanding obligations.

♦ Historical Transaction Review:
Analyze previous sales or transfers to identify irregularities or potential claims on the property.

♦ Permits and Licenses:
Review construction and operational permits to confirm compliance, especially for vacation rentals.

♦ Notary Examination:
Engage a local notary to authenticate and verify documents, ensuring legal accuracy.

♦ Surveyor Verification:
Cross-check the property’s physical boundaries and conditions against the land title and development plans.

♦ Final Approval:
Obtain legal clearance and authorization from relevant authorities before completing the transaction.

Once a property is chosen, the real estate deal typically proceeds with the following steps:

♦ Offer and Negotiation:
Submit a formal offer and negotiate the price, terms, and conditions with the seller.

♦ Drafting the Sales Agreement:
Prepare and review the Sale and Purchase Agreement (SPA), outlining the transaction terms.

♦ Deposit Payment:
An initial deposit (often 10%) is required to secure the property and formalize the intent to purchase.

♦ Legal Due Diligence:
Conduct a final legal review to confirm clear title, valid permits, and the absence of legal encumbrances.

♦ Notary Involvement:
Engage a local notary to facilitate signing the SPA, ensuring legal compliance and document authentication.

♦ Transfer of Funds:
This is when you arrange for full payment of the agreed purchase price, typically through a secure banking transaction.

♦ Title Transfer:
The notary oversees the land title transfer to the buyer and registers it with the National Land Agency (BPN).

♦ Tax and Fee Payment:
You must pay applicable taxes, notary fees, and other closing costs associated with the transaction.

♦ Final Handover:
The property is formally handed over to the buyer once payment and title transfer are complete.

♦ Registration and Ownership Confirmation:
Ensure the updated land certificate reflects the new ownership and is correctly registered with relevant authorities.

Here’s how the real estate deal proceeds after choosing a property, emphasizing the role of a company to represent and support your interests:

♦ Engage a Representation Company:
Hire a reputable local firm specializing in real estate to guide and protect your interests.

♦ Offer and Negotiation Support:
Your representative company negotiates with the seller to secure the best price and terms.

♦ Legal Document Preparation:
The company ensures all legal documents, including the Sale and Purchase Agreement (SPA), are drafted accurately and in compliance with Indonesian law.

♦ Deposit Payment Assistance:
Your representative handles the secure deposit transfer, ensuring all payments are properly documented and protected.

♦ Legal Due Diligence:
The company conducts thorough legal checks, including verifying the property’s title, permits, and encumbrances.

♦ Notary Coordination:
Your representative works with a trusted notary to authenticate documents and ensure the transaction follows legal procedures.

♦ Fund Transfer Support:
The company assists with safe and transparent fund transfers, ensuring full payment is processed securely.

♦ Title Transfer Supervision:
The representative oversees the transfer of ownership with the National Land Agency (BPN), ensuring smooth and proper registration.

♦ Handling of Fees and Taxes:
The company manages the payment of all taxes, fees, and other closing costs and ensures compliance with local regulations.

♦ Final Handover and Inspection:
Your representative arranges the formal handover of the property, including a final inspection, to ensure everything is in order before closing.

♦ Post-Sale Support:
The company continues to provide support after the sale, assisting with property management, legal compliance, or any unforeseen issues.

Concept creation | Architecture | Design

♦ Technical drawings

♦ Interior and Exterior design

♦ Landscaping

Construction process

♦ Fulfilling the construction requirements and meeting project parameters.

♦ Monitoring and control of deadlines.

♦ Weekly updates and reports with photo/video material.

Implementation & Management

♦ Legal compliance & permits

♦ Operations handling