Reviewed
Gross and net are not close
A gross yield takes annual booking revenue and divides it by what you paid. It ignores everything that happens between a guest paying and money reaching you. A net yield subtracts the operating cost of actually running a short-stay property, and that gap is not a rounding error.
When someone quotes a yield without saying which it is, assume gross. Ask for the same projection with costs subtracted, and ask what occupancy it assumed. Those two questions separate a real forecast from a brochure.
What comes out before you see it
None of these are optional, and a projection that omits them is not describing a business.
- Management commission, if someone else is running the bookings and the guests.
- Platform fees on whichever channels the villa is listed on.
- Cleaning, linen and consumables between stays.
- Utilities, which on a pool villa with air conditioning are not small.
- Maintenance and the reserve for the things that fail in a tropical climate.
- Tax on the rental income, and the accounting to file it.
- Vacancy, which is the cost of the nights nobody books.
What actually drives occupancy
Location sets the ceiling and the villa sets whether you reach it. Canggu and the Bukit have the strongest demand, but they also have the most competition, and a mediocre villa in a strong market underperforms a good one in a quieter market.
Beyond location, the things that move bookings are unglamorous: genuine privacy, a pool that photographs honestly, shade that makes the outside usable at midday, air conditioning that works, and reliable water and power. Guests forgive an ordinary sofa. They do not forgive a villa that is hot, overlooked or out of water.
The licence a short-stay villa needs
Renting a villa to guests nightly is a commercial activity and it needs the right permit and licence, not just a building that exists. That has to line up with the land's zoning and permitted use, and with the ownership structure you hold it through. A villa on land not zoned for accommodation cannot be licensed for it, however well it is built.
This is one of the reasons we check zoning before design rather than after. It is also why a company structure rather than a personal lease is often the right vehicle when the villa is a business.
How to sanity-check a projection
Take the projection you have been given and rebuild it with your own assumptions. Halve the occupancy and see whether the number still works. Add the costs above at realistic rates. Then compare what is left against what the same capital would earn somewhere safer. If the villa only makes sense at ninety percent occupancy, it does not make sense.
General information about building in Bali, not legal, tax or financial advice, and not a quotation. Rules and prices change. Confirm any title, zoning or tax position with a licensed notaris or PPAT and your own advisers before you commit.