**To calculate Bali villa rental ROI, divide your annual net income (gross rental revenue minus management fees, maintenance, tax, and operating costs) by your total cash invested (purchase price plus all acquisition costs), then multiply by 100. A realistic net figure for a well-run Bali villa sits well below the headline gross yield agents quote.**
That gap between gross and net is where most foreign buyers get burned. A listing brags “20% yield” and what they mean is gross occupancy revenue before a single rupiah of cost comes out. By the time management commission, deep-cleaning, OTA fees, repairs, and tax are paid, the number you actually keep can be less than half of that. This page walks through the full arithmetic with a real worked example so you can build the same model for any property before you sign anything.
What’s the difference between gross yield and net ROI?
Gross yield answers one question: what does the villa earn before costs, as a percentage of price? Net ROI answers the question that matters: what do you keep after everything, as a percentage of what you actually spent. They are not the same metric and confusing them is the single most expensive mistake in Bali property.
- Gross yield = annual gross rental income / property purchase price
- Net yield = annual net income (after operating costs) / property purchase price
- Net ROI / cash-on-cash return = annual net income / total cash invested (price plus acquisition costs)
Cash-on-cash is the honest figure because it includes the money that vanishes at purchase and never produces rent: notary fees, due-diligence legal work, agent commission, and furnishing. Those costs are real capital you committed, so they belong in the denominator.
Which numbers do you actually need?
Before you can model anything, gather these inputs. Estimate conservatively. The figures below are illustrative for this worked example only and will vary by area, season, and operator (figures as of mid-2026, subject to change):
| Input | What it covers | Example value |
|---|---|---|
| Purchase price | The villa itself (leasehold or freehold) | IDR 5,000,000,000 (~USD 305,000) |
| Acquisition costs | Notary, legal due diligence, agent fee, taxes on transfer | IDR 500,000,000 (~USD 30,500) |
| Furnishing & setup | FF&E, pool kit, linens, photography | IDR 300,000,000 (~USD 18,300) |
| Average nightly rate (ADR) | Realistic blended rate across high and low season | IDR 3,500,000 (~USD 214) |
| Occupancy | Honest annual average, not peak-month figures | 65% |
| Management commission | What the operator takes of gross | 20% of revenue |
We use an indicative exchange rate of roughly IDR 16,400 to USD 1 for this illustration. Always run your own numbers at the live rate on the day you transact, because currency swings alone can move your USD return by several points.
How do you calculate gross rental revenue?
Multiply your average daily rate by the number of nights actually booked. With a blended ADR of IDR 3,500,000 and 65% occupancy across 365 nights:
- Booked nights = 365 × 0.65 = 237 nights
- Gross annual revenue = 237 × IDR 3,500,000 = IDR 829,500,000 (~USD 50,600)
Against a IDR 5 billion purchase price, that is a gross yield of about 16.6%. This is the seductive number. It is also fiction as a measure of what you pocket, because not one cost has been subtracted yet.
A note on occupancy honesty: 65% is a defensible average for a well-located, professionally marketed Bali villa, but plenty of properties run at 45-55% once you strip out the owner’s own stays and the slow shoulder months. If your model only works at 80% occupancy, it does not work.
What costs come out before you see profit?
Here is the full subtraction, line by line. This is where gross becomes net.
| Cost line | Basis | Annual amount (IDR) |
|---|---|---|
| Management commission | 20% of gross revenue | 165,900,000 |
| OTA / channel fees | ~15% of bookings via Airbnb/Booking | 90,000,000 |
| Utilities (power, water, internet) | Pool and AC are heavy draws | 60,000,000 |
| Staff (villa manager, cleaning, garden) | Local wages, BPJS where applicable | 84,000,000 |
| Maintenance & repairs | Pool, aircon, tropical wear, ~3% of value | 150,000,000 |
| Insurance & banjar/community fees | Property cover plus local contributions | 25,000,000 |
| Total operating costs | 574,900,000 |
That leaves pre-tax income of IDR 829,500,000 − IDR 574,900,000 = IDR 254,600,000 (~USD 15,500).
How is rental income taxed for a foreign owner?
Rental income earned in Indonesia is taxable in Indonesia, and the structure depends entirely on how you hold the property and your tax residency status. A foreign individual without an Indonesian tax structure is generally subject to a final tax on gross rental income; income held through a PMA company is taxed on profit at the corporate rate, with VAT (PPN) potentially applying to short-term rental services. Rates, thresholds, and the treatment of short-stay versus long-stay differ and change.
For this worked example only, we apply an illustrative blended effective tax of IDR 50,000,000 on the rental activity. Do not treat that as your number. Tax outcomes for property in Bali are genuinely case-specific, and the difference between a leasehold individual holding and a PMA corporate holding can swing your bill substantially. Confirm your actual position with a licensed Indonesian tax adviser before you model a final return. Bali Premium Trip is an independent concierge and broker, not a licensed tax, legal, or financial adviser, and nothing here is tax advice.
The full worked ROI calculation
Now we assemble everything into the cash-on-cash figure.
| Step | Calculation | Result |
|---|---|---|
| Gross annual revenue | 237 nights × IDR 3.5M | IDR 829,500,000 |
| Less operating costs | (from table above) | − IDR 574,900,000 |
| Pre-tax income | IDR 254,600,000 | |
| Less illustrative tax | − IDR 50,000,000 | |
| Net annual income | IDR 204,600,000 | |
| Total cash invested | Price + acquisition + furnishing | IDR 5,800,000,000 |
| Net cash-on-cash ROI | 204,600,000 / 5,800,000,000 | ≈ 3.5% |
So the villa that “yields 16.6%” returns roughly 3.5% net cash-on-cash in this scenario (~USD 12,500 on ~USD 354,000 invested). That is the number to compare against alternatives, and it excludes any capital appreciation or, crucially for leasehold, the decline in lease value as years tick off the term.
What this means before you buy
A few honest takeaways from the math:
- Always demand the net, never the gross. If a seller can only show you a gross yield, treat it as a marketing figure, not a financial one.
- Stress-test occupancy and ADR. Re-run the model at 50% occupancy and a 10% lower rate. If it still clears your hurdle, the deal has a margin of safety.
- Leasehold changes everything. On a 25-year lease, you are also amortising the lease cost, which can turn a positive cash return into a negved capital position by year 25 unless appreciation or renewal offsets it.
- Costs in Bali are not optional extras. Tropical maintenance, staff, and OTA fees are structural, not edge cases.
Run this model for any property you are seriously considering, plug in your own verified inputs, and let a licensed tax adviser confirm the tax line. The arithmetic is simple. The discipline to use realistic inputs is what protects your capital.
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