I’m going to tell you about a couple from Melbourne who bought a villa in Pererenan last year. Not because their story is unusual — it’s actually one of the most typical transactions we handle — but because watching a real purchase unfold is more useful than reading another list of numbered steps.
Their names are changed, the numbers are real.
The call
Sarah and James reached out in August 2025. Combined budget of $350,000. Goal: a two-bedroom villa they could rent on Airbnb for 8–10 years, then sell. They’d been reading guides for months and had a spreadsheet of villas from Instagram that they liked the look of.
The first thing I asked wasn’t about any of those villas. It was: have you decided on a legal structure?
They hadn’t. Most people haven’t. And this is the decision that needs to come first, because it shapes what you can buy, what it costs to close, whether you can legally operate a rental, and what your exit looks like. Choosing a property and then figuring out the legal wrapper is a recipe for pressure decisions on documents you’ll live with for decades.
For Sarah and James — one villa, under $400k, planning to hold about ten years — leasehold was the obvious fit. A private contract with the landowner, 25–30 years, closing costs around 2–3%, no company to maintain. That’s the path nine in ten of our foreign clients take.
If they’d had Indonesian residency, I would have mentioned Hak Pakai — a government title in their personal name at BPN, up to 80 years, no corporate overhead. Genuinely underused option. But they lived in Melbourne and had no plans to get a KITAS.
If they’d been building a portfolio — three villas, maybe a boutique hotel — the conversation would have gone to PT PMA. Foreign-owned company, HGB title, strongest rights, but $3,000–$8,000 to set up and roughly the same annually in compliance. The math only makes sense at scale. We compared all three structures in our leasehold vs freehold article.
One thing I said clearly and early: nominees are off the table. An Indonesian holding land “for” a foreigner has been criminal since Perda No. 4/2026. Before that it was merely risky — now it’s prosecutable.
The budget conversation nobody wants to have
Sarah had $350,000 earmarked. I told her the property she could afford was about $290,000–$300,000.
She didn’t love hearing that. But here’s the math. On a $300,000 leasehold villa, closing costs run $6,000–$9,000 (notary, legal review). If the villa needs furnishing — and many do — add $5,000–$15,000. Touch-ups and immediate repairs: $2,000–$5,000. Then there’s the gap between buying and earning: licensing setup, management onboarding, platform registration, professional photography. Budget at least three months of carrying costs with zero income. All in, she was looking at $315,000–$345,000 before a single guest checked in.
Our tax guide has every line item. But the principle is simple: whatever the listing says, budget 15–20% above it for total cost.
Every client I’ve worked with who ran into cash flow problems made the same mistake — they treated the listing price as the finish line instead of the starting point.
Finding the villa (from twelve thousand kilometers away)
Sarah and James weren’t coming to Bali to look at properties. This used to feel unusual; in 2026 it’s how most of our deals work. Over half our transactions close with buyers who haven’t visited the property before signing.
I know that sounds reckless. It’s not — provided your agent is showing you reality instead of marketing. I sent Sarah phone-recorded video of the three shortlisted villas: not just the pool and the living room, but the access road, the neighbors’ houses, the street at midday and at night. Drone footage showing what was being built next door. GISTARU screenshots confirming each plot’s zoning. Comparable transactions in the area so she could judge whether the prices were fair.
She eliminated one villa immediately — the access road was a single-lane dirt track that flooded in the wet season. That’s the kind of thing listing photos never show you.
Before I’d shown her anything, I’d already screened every property on two criteria. First: zoning. GISTARU — the government’s free map at gistaru.atrbpn.go.id/rdtrinteraktif/ — tells you the zone color in five minutes. Green means agricultural land, criminal penalties for conversion under Perda No. 4/2026. Yellow is residential — buildable, but short-term rental licensing gets complicated. Pink is tourism and the cleanest regulatory path. Our zoning guide breaks down each color. Second: certificate type. Under Government Regulation 18/2021, unregistered legacy certificates — Girik, Petok D, Letter C — became invalid after February 2026. We still see sellers offering Girik-titled land to buyers who don’t know better.
Sarah’s shortlist narrowed to two villas in Pererenan, both on yellow-zoned land with registered SHM certificates. One was $295,000, the other $310,000.
Price negotiation (shorter than you’d think)
Bali is a negotiation culture. Listed prices sit 5–15% above where deals close. Sarah offered $265,000 on the $295,000 villa. The seller came back at $285,000. They settled at $278,000 after two rounds. Total negotiation time: four days.
I handled the back-and-forth. Buyers negotiating directly with sellers creates dynamics that don’t work in the buyer’s favor — there’s a reason every real estate market in the world uses intermediaries.
LOI and deposit (where casual becomes contractual)
With the price agreed, I drafted a Letter of Intent — everything in writing: price, lease duration (25 years plus contractual extension option), deposit amount, timeline, conditions.
The seller wanted a 10% deposit — about IDR 450 million. This went into the notary’s escrow account. Not the seller’s personal bank. Not my company’s account. The notary’s. I’m emphatic about this because deposits wired to personal accounts before documentation exists is, after nominees, the second most common way foreigners lose money in Bali.
The deposit agreement specified: full refund if due diligence uncovered zoning problems, title issues, or building permit defects. If Sarah had walked away for personal reasons, the seller would keep the deposit. Fair terms. The seller agreed without pushback — which told me something good about how the rest of the deal would go. When sellers resist written refund conditions, it usually means there’s something the due diligence is going to find.
Due diligence (and what it actually found)
This is the part Sarah wanted to rush. “Can we close by October?” she asked. I said: due diligence takes the time it takes.
The notary went to BPN with the SHM number. Confirmed the certificate was real, matched the physical plot, and belonged to the person selling. No liens, no disputes, no encumbrances. Clean.
The SKTR — the official zoning certificate from Badung’s PUPR office — confirmed yellow residential designation. Not green, not contested, not “in process of rezoning.” Solid.
A boundary survey matched the certificate to the physical plot within acceptable tolerance. PBB land tax was current — no gaps in payment history.
Then the notary found something. The villa had been expanded — a storage room converted into a small bedroom — without updating the PBG building permit. The addition was maybe 15 square meters, professionally done, but not on the permit.
This is absurdly common in Bali. Probably half the villas on the island have unpermitted additions of some kind. It’s not necessarily a deal-killer, but it needs to be addressed — either the seller regularizes the permit before closing, or the price adjusts to reflect the buyer taking on that risk.
Sarah’s seller agreed to file the PBG amendment. Added twelve days to the timeline. Sarah was frustrated. I told her: this is the process working correctly. You’re finding problems before they become yours.
Total due diligence cost: about $1,200. Total time: three weeks including the PBG amendment delay.
The documents (where the real money is made or lost)
The notary drafted the lease agreement in Indonesian and English. This is the part of the process that other guides cover with “make sure you get a good contract.” Let me be more specific about what that actually means, because the clauses in this document are worth tens of thousands of dollars.
Sarah’s extension clause was tied to an independent appraisal formula — not “price to be mutually agreed at expiry,” which is the most common and most dangerous phrase in Bali leasehold law. That vague language means the landowner names any number they want at year 25, and you have no leverage. We’ve written an entire article about what happens when leases expire. The difference between a formula-based clause and a vague one can be $20,000–$50,000 at renewal time.
The compensation clause specified that if the lease ended without extension, the landowner would pay Sarah the independently appraised value of any improvements. Without this clause, a $150,000 villa built on leased land becomes the landowner’s property for free when the lease ends. Transfer rights allowed Sarah to assign the lease to another foreigner without needing the landowner’s consent — critical for exit flexibility. Dispute resolution specified BANI arbitration rather than Indonesian courts.
All of this was drafted by Sarah’s notary — someone I recommended but she vetted independently. Not the seller’s notary. Every clause that could go either way gets written in favor of whoever’s paying the drafter. That’s not corruption, it’s professional incentive. A client of ours saved $35,000 the previous year solely because her independently-chosen notary rewrote an extension clause the other side had left deliberately open-ended.
Signing day
Sarah granted power of attorney to a representative in Bali — notarized and legalized at the Indonesian consulate in Melbourne. Standard practice, thousands of foreign purchases close this way every year.
The money — $278,000 plus closing costs — wired to the notary’s account. One wrinkle nobody warns you about: international transfers to Indonesian banks can take 5–7 business days for compliance clearance. Sarah’s transfer took six days. We’d scheduled signing for the day after the expected arrival. It arrived one day late. The signing moved by one day. Not a crisis — just plan for it.
At the notary’s office, the lease was executed. The seller paid 10% PPh — that’s income tax on the lease value. Sarah, as lessee, owed no acquisition tax at all. On a $278,000 deal, that’s roughly $14,000 she wasn’t paying compared to what a Hak Pakai buyer would owe in BPHTB. Leasehold’s tax advantage is one of the reasons it dominates foreign purchases.
Sarah walked out with a notarized lease agreement — her legal record of ownership rights for 25 years plus a contractual extension option. Total time from first call to signed documents: nine weeks.
The delay was entirely the PBG amendment; without it, this would have closed in seven.
What happened after (the part nobody writes about)
This is where every other guide on the internet stops. Sarah now owned a villa. She did not yet have a business.
The licensing question hit first, and it wasn’t simple. Her villa sat in a yellow residential zone — which means a full villa license (KBLI 55193) technically requires pink zoning that she didn’t have. The workaround: operating through a Pondok Wisata arrangement with an Indonesian operator who held the correct permits. This kind of setup is common in yellow zones, but it requires finding the right operator and getting the paperwork aligned before you can list anywhere. Since March 2026, Airbnb and Booking.com verify NIB numbers before allowing listings. Sarah couldn’t just upload photos and start collecting bookings. No verified license, no listing. That rule changed the economics of the first few months more than anything else.
Management took longer to sort out than she expected. She talked to four companies. The first two quoted 15% of gross but couldn’t show her real occupancy data from their existing portfolio — only projections. The third had good data but terrible reviews from villa owners she tracked down independently through Airbnb (not the references the company provided — the owners she found on her own). The fourth charged 20% — the most expensive — but managed a portfolio averaging 68% occupancy versus 55% for the budget options. She did the math: 68% of $200/night at 20% commission produced more income than 55% of $200/night at 15%. The expensive manager was actually the cheapest choice.
I had to push her on two things she wanted to delay. The NPWP tax registration, which she saw as bureaucratic hassle, was actually worth $4,500 a year — the difference between a 10% and 20% withholding rate on her projected gross income. And property insurance, which she figured she’d “get around to eventually.” I asked her how she’d feel about an uninsured $278,000 asset in a place with monsoon rains, tropical humidity, and occasional earthquakes. She signed the policy that week.
The last stretch — professional photography, platform onboarding, pricing calibration, cosmetic fixes the management company recommended — took about five weeks. Her first booking came eleven weeks after closing. First guest walked through the door in late November 2025.
Twelve months later: $38,000 gross revenue. After management, platform commissions, maintenance, taxes, and insurance — about $22,000 net. That’s 8% on her total investment of roughly $310,000. I won’t pretend that’s the number she hoped for when she first called us. She’d seen the Instagram posts promising 15%. But it’s real money arriving in her Melbourne bank account every month from an asset she spends maybe two hours a week thinking about. Year two is tracking higher — occupancy is up as reviews accumulate and the algorithm favors consistent properties.
How other purchases compare
Sarah’s deal — nine weeks to close, three months to first guest — is a typical leasehold villa transaction. But I want to be clear that “typical” covers a wide range.
The smoothest deals we do are clean leaseholds where nothing surfaces in due diligence. Four to five weeks, done. Maybe 20% of our transactions look like that. Most take eight to ten weeks because something needs resolving — a tax gap, a slow seller, a boundary question. None of it alarming.
PT PMA is a different pace entirely. If the company already exists, the property side moves at normal speed. If you’re forming the company and buying simultaneously — which is how most first-time PT PMA buyers do it — expect ten to fourteen weeks. The property isn’t the bottleneck. The corporate registration is. That’s why I tell PT PMA clients to start formation before they start property shopping.
Land-and-build changes the conversation from weeks to months. Closing on the land might take six weeks, but then you’re waiting on PBG permits (one to three months is realistic in Badung), then construction (six to ten months depending on complexity and weather), then licensing and management setup. First guest: twelve to eighteen months from when you first picked up the phone. I mention this not to discourage anyone but because I’ve watched clients commit to building without understanding the timeline, then run into cash flow stress at month eight when the villa isn’t finished and they’ve been carrying costs for over a year.
Worth noting for anyone considering land-and-build: six regencies have restricted new construction permits for tourism properties on agricultural land since late 2025 (Tabanan, Jembrana, Buleleng, Bangli, Karangasem, Klungkung). Badung is unaffected. Buying existing properties is fine everywhere. But if you’re eyeing a plot in one of those six districts, confirm the PBG is obtainable before you spend anything.
Due diligence surfaces something in about a third of all deals we handle. Usually minor — Sarah’s PBG amendment was typical. Sometimes it’s a deal-breaker: wrong zoning, title dispute, a structure that can’t be regularized. When that happens, you lose two to four weeks finding an alternative property. Frustrating, but infinitely better than discovering the problem after you’ve paid.
What I tell people who ask for advice over coffee
Not the structured version. Not the legal framework. Just the things I’ve learned matter most, after watching hundreds of these transactions play out.
The structure question comes first — before you look at anything. Leasehold for most people. PT PMA if you’re running multiple properties or a hospitality business. Whatever you choose, decide before you fall in love with a villa, because falling in love makes people skip steps.
Zoning comes before everything else. Five minutes on GISTARU. I know I’ve said this already. I’ll keep saying it because people keep not doing it.
Your notary needs to be yours — found by you, paid by you, working for you. This is the single highest-value decision in the entire process and it costs 1–2% of the deal.
And the number on the listing is not the number you’ll spend. Add 15–20% for reality — closing costs, furnishing, carrying costs, licensing, the months before income starts. If that adjusted number doesn’t fit your budget, look at a cheaper property rather than hoping the gap will somehow close itself.
That’s it. Everything else is detail. Important detail, but detail that your notary and your agent handle every day. Those four decisions are yours.
