Can I still do a rental flip?

Can I still do a rental flip

The Indonesian government is gradually formalizing industries, passing legislation that protects businesses and consumers and is finally enforcing regulations.

What you hear many expats say is that Indonesia is becoming more and more like a “normal country”.  What this really means is the government is getting smarter and making tax avoidance more difficult for both Indonesian nationals and foreign residents.

For some people though this evolution isn’t something they want to understand and/or believe.

As a real estate agent in Indonesia we often get both nationals and foreigners asking to find them a cheap villa that they can rent out yearly and then these new tenants use the villa to sub-rent out to holiday-makers.

But what these individuals don’t consider is the way the country is becoming more “formalized” so trying to make a quick buck without following the regulations is becoming much more difficult.

In the world of real estate in Indonesia this boils down to two main aspects:

1. Villas in a “tourism zone” with the right permits to operate as a holiday rental business will (most of the time) charge a yearly rental fee that does not make it attractive to sub-rent it out to holiday makers. It’s basically too expensive.

2. And the cheap yearly rentals villas will (most of the time) find themselves in a “residential zone” and therefore they won’t have the permits necessary to legally sub-rent out for the holiday rental market.

Once we clarify these points to those who send us these enquiries we typically receive a comment along the lines of “but oh my friend was doing this some years back and didn’t have any issues of renting a villa in a residential zone that didn’t have permits.”

But this is where things have changed.

Back in the day it’s true to say that “yes” the government didn’t have the same resources as it does now to implement its regulations, but now things have moved along and the government in Bali is very serious about collecting its taxes from tourism related activities.

What that means is that it won’t take long for the authorities to find you if you’re renting out a villa to holiday-makers without the correct legal permits.

How you may ask?

It’s really quite simple because all the authorities need to do is to go online and check on the numerous holiday rental villa websites and cross-check to see if these villas actually have the right permits and if they are paying tax.

We always inform our client that it’s not worth taking these risks. The trouble you might find yourself in is often much bigger then any potential monetary gains.

The villa rental market in Bali is definitely a smart place to invest, but we at Seven Stones know for a fact that trying to do rental flips without the right paperwork in place will bring you more headaches than it’s worth.

First published in Gapura Bali

Seven Stones Indonesia is a property company headquartered in Bali, Indonesia, with a mission to help people who are interested in buying and selling residential and commercial real estate.

If you’re thinking about property, ROI, capital gains or lifestyle investments in Bali, Jakarta, Surabaya, and Indonesian’s Eastern Islands and need some friendly advice and guidance then why not email hello@sevenstonesindonesia.com or check out Seven Stones Website | Seven Stones Linkedin | Seven Stones Facebook

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Andrzej Barski

Director of Seven Stones Indonesia

Andrzej is Co-owner/ Founder and Director of Seven Stones Indonesia. He was born in the UK to Polish parents and has been living in Indonesia for more than 33-years. He is a skilled writer, trainer and marketer with a deep understanding of Indonesia and its many cultures after spending many years travelling across the archipelago from North Sumatra to Irian Jaya.

His experience covers Marketing, Branding, Advertising, Publishing, Real Estate and Training for 5-Star Hotels and Resorts in Bali and Jakarta, which has given him a passion for the customer experience. He’s a published author and a regular contributor to local and regional publications. His interests include conservation, eco-conscious initiatives, spirituality and motorcycles. Andrzej speaks English and Indonesian.

Terje H. Nilsen

Director of Seven Stones Indonesia

Terje is from Norway and has been living in Indonesia for over 20-years. He first came to Indonesia as a child and after earning his degree in Business Administration from the University of Agder in Norway, he moved to Indonesia in 1993, where he has worked in leading positions in education and the fitness/ wellness industries all over Indonesia including Jakarta, Banjarmasin, Medan and Bali.

He was Co-owner and CEO of the Paradise Property Group for 10-years and led the company to great success. He is now Co-owner/ Founder and Director of Seven Stones Indonesia offering market entry services for foreign investors, legal advice, sourcing of investments and in particular real estate investments. He has a soft spot for eco-friendly and socially sustainable projects and investments, while his personal business strengths are in property law, tourism trends, macroeconomics, Indonesian government and regulations. His personal interests are in sport, adventure, history and spiritual experiences.

Terje’s leadership, drive and knowledge are recognised across many industries and his unrivalled network of high level contacts in government and business spans the globe. He believes you do good and do well but always in that order. Terje speaks English, Indonesian and Norwegian.

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Ridwan Jasin Zachrie

CFO of Seven Stones Indonesia, Jakarta

Ridwan is one of Indonesia’s top executives with a long and illustrious career in the financial world. He holds several professional certifications including being a Certified Business Valuer (CBV) issued by the Australian Academy of Finance and Management; Broker-Dealer Representative (WPPE); and The Directorship Certification for Directors and Commissioners, issued by the Indonesian Institute of Commissioners and Directors.

His experience includes being the Managing Director at one of the top investment banking groups in the region, the Recapital Group, the CFO at State-owned enterprises in fishery industry and the CEO at Tanri Abeng & Son Holding. He’s also been an Independent Commissioner in several Financial Service companies and on the Audit and Risk Committee at Bank BTPN Tbk, Berau Coal Energy Tbk, Aetra Air Jakarta as well as working for Citibank, Bank Mandiri and HSBC. His last position was as CFO at PT Citra Putra Mandiri – OSO Group.

Ridwan has won a number of prestigious awards including the Best CFO Awards 2019 (Institute of Certified Management Accountant Australia-Indonesia); Asia Pacific Young Business Leader awarded by Asia 21 Network New York USA (Tokyo 2008); UK Alumni Business Awards 2008 awarded by the British Council; and The Most Inspiring Human Resources Practitioners’ version of Human Capital Magazine 2010.

He’s a member of the Board of Trustees of the Alumni Association of the Faculty of Law, Trisakti University, Co-Founder of the Paramadina Public Policy Institute and actively writes books, publications and articles in the mass media. He co-authored “Korupsi Mengorupsi Indonesia” in 2009, which helps those with an interest in understanding governance in Indonesia and the critical issue of corruption. Ridwan speaks Indonesian and English.

Per Fredrik Ecker

Managing Director of Seven Stones Indonesia, Jakarta

Per is the Managing Director of the Seven Stones Indonesia (SSI) Jakarta office and has more than 25-years’ experience in Indonesia, China, and Western Europe. He previously worked in senior management positions with Q-Free ASA, Siemens AG, and other companies in the telecom sector. Over the last six years, he has been the Chairman of the Indonesia-Norway Business Council (INBC) and recently become elected to be on the board of EuroCham Indonesia.

His most recent experience is within Intelligent Transport Solutions (ITS), Telecom, and other sectors within the Indonesian market. He is today through his position in SSI and by representing Norway Connect, promoting Nordic and European companies that would like to explore business opportunities in the Indonesian market. He’s also playing an active role to help create the Nordic House concept in Jakarta that will provide an excellent platform for Nordic companies entering Indonesia, where they’ll find a community that can offer support with trusted information and affordable services to enter this market.