Developer presentations rarely quote a return below 15% a year. The owner statements we see land somewhere between 7 and 11% net. Nobody is lying — they are simply counting different things.
Gross and net are not the same number
Gross yield is total rental revenue divided by purchase price. It ignores platform commission, management, taxes and the fact that a house wears out.
Net yield is what actually reaches your account. That is the number worth comparing against a deposit or a bond.
In Bali roughly half the revenue sits between the two. If a brochure says 16%, it is almost certainly gross.
Worked example: a two-bedroom in Canggu
A typical property: two bedrooms, a pool, leasehold with 25 years remaining, $350,000 furnished.
| Line | Basis | Per year |
|---|---|---|
| Average nightly rate | $180 | — |
| Occupancy | 72% ≈ 263 nights | — |
| Revenue | 263 × $180 | $47,340 |
| Platform commission | 15% | −$7,100 |
| Management company | 20% of net revenue | −$8,050 |
| Staff, cleaning, linen | — | −$6,000 |
| Electricity, water, internet | — | −$3,600 |
| Pool, garden, small repairs | — | −$2,400 |
| Taxes and levies | — | −$4,700 |
| Insurance | — | −$900 |
| Furniture and appliance reserve | 5% of revenue | −$2,400 |
| Net income | — | $12,190 |
| Net yield | $12,190 / $350,000 | 3.5% |
That looks modest, and it is an honest result for a fully outsourced property at average occupancy. From there it improves: direct bookings cut platform fees, self-management removes the operator's share, and better photography and finishes lift the rate. Owners who treat it as a business land between 7 and 9%.
What moves the number most. Occupancy. The gap between 60% and 80% is around $13,000 of revenue a year on this example — the entire net income. Which is why area, photography and reviews matter more than the purchase price.
Costs people forget
- Gap nights between guests. No villa lets 365 nights, however strong the demand.
- Replacing furniture and appliances. Humidity and salt air consume electronics in three to four years.
- The accommodation licence and its annual upkeep.
- Accounting and reporting if the property sits inside a company.
- Your own holidays there. Every week you use is a week that does not earn.
Occupancy through the year
The peaks are July–August and mid-December to early January. The troughs are February and November. Nightly rates swing by a factor of two, occupancy by around one and a half.
The practical consequence: build the model month by month rather than multiplying an average rate by 365. If a seller cannot produce last year's monthly figures, treat that as information in itself.
Leasehold: an asset on a countdown
If the property is held on a long lease, one line almost never appears in a presentation: term amortisation. A $350,000 villa with 25 years to run loses roughly $14,000 of value a year simply because the remaining term shortens.
That does not make leasehold a bad deal — in a rising market, capital growth offsets part of it. But comparing leasehold and freehold yields without that adjustment is comparing two different things.
When someone promises 20%
Those numbers usually rest on one of four substitutions:
- Quoting gross yield as though it were net.
- Assuming 85–90% occupancy, which only a handful of properties achieve.
- Applying the high-season rate to the whole year.
- Guaranteeing income for two or three years, with the guarantee priced into the purchase.
A guaranteed return is not fraud in itself — but somebody pays for it, and it is usually the buyer.
In short
- Compare net yield only, and ask for the cost breakdown.
- A realistic band for Bali is 7–11% net with your involvement.
- Ask for last year's monthly occupancy.
- For leasehold, put term amortisation in the model.
