How to Evaluate Bali Villa ROI (Honest Formula) — Agencies Won’t Tell You

Most foreign buyers begin their villa search with excitement and spreadsheets. Agents hand out ROI charts showing confident numbers, usually somewhere between 12 and 18 percent. The spreadsheets look clean and comforting, and the villas in the brochures look even better.

But once you spend enough time inside actual buildings in Bali — inside the voids above ceilings, behind wardrobe panels, near roof joints, next to pumps and AC compressors, and underneath still-wet waterproofing membranes — you start to realise something very different: In Bali, ROI is a building-performance story disguised as a financial metric. It is not a promise. It is an outcome. People think ROI falls when tourism slows or Airbnb demand shifts. But in practice, ROI falls when a villa can’t survive Bali.

The part of ROI no one calculates

When you walk into a villa that has only been operating for one year, everything seems perfect. The paint still looks fresh, the timber door frames haven’t absorbed too much moisture yet, and the roof membrane hasn’t gone through a full monsoon cycle. Bali hasn’t tested it.

The second year is when the truth arrives. This is the point most buyers never heard about before they purchased. A villa that was advertised as “brand new luxury” begins to show faint dampness behind the bed. The AC in the master bedroom starts to struggle because the unit was sized for the room, not the cubic volume. The sliding doors swell slightly after weeks of rain. The plaster in the bathroom absorbs moisture because the waterproofing stops 10–15 cm below where it should. The pool pump becomes noisier. The kitchen cabinets begin to expand at the edges.

None of this appears in an agent’s financial model. But all of it affects ROI — directly. Revenue doesn’t fall because the market weakened. Revenue falls because the villa is tiring faster than the spreadsheet expects.

Why Bali behaves differently from other investment markets

Bali looks simple from afar. Sun, nature, tourism, hospitality. But financially speaking, it is one of the most complex tropical environments to maintain property in. Humidity rarely drops below 80 percent. Rain falls so heavily from December through March that waterproofing is either your best friend or your most expensive enemy. Salt content in the air corrodes metal faster than owners expect. And contractors here operate with wildly different standards — some excellent, some careless, many fast.

A villa that looks “high-end” in photos may, behind the tiles, have a roof slope that is one degree too flat, or a membrane overlap that was rushed, or bathroom drains that were installed without proper traps. These details decide the true cost of owning a villa. They decide your occupancy, your guest satisfaction, your repair schedule, and ultimately your return.

This is why two villas only a few hundred meters apart can have outcomes that have nothing in common. Similar style, similar bedrooms, similar price point — but one holds its integrity, and the other slowly surrenders to humidity.

How ROI actually forms — not theoretically, but physically

The villas that earn consistently are never the loudest or most glamorous ones. They are the villas where you walk in and immediately understand that someone designed it with climate awareness. Rooms feel dry even when the weather is stagnant. The transitions between indoor and outdoor spaces show shading that actually makes sense. Bedrooms feel equally comfortable. The villa has enough depth in the overhangs. You don’t hear road noise inside. The kitchen isn’t a decorative prop — it works. The AC runs without strain. The electrical panel isn’t overcommitted. The pool equipment sits in a space that isn’t constantly wet. The wardrobes don’t feel humid.

None of this shows up in an agent’s brochure. All of this shows up in your ROI. When guests feel the space works, they stay longer, leave better reviews, return the next season, and recommend the villa to others. When the building constantly fights the climate, the owner fights operational burnout.

The real collapse of ROI rarely comes from revenue — it comes from repairs

People underestimate how fast tropical environments consume buildings.

A villa that produces excellent revenue but requires constant AC replacements, mold remediation, repainting, drainage fixes, pump repairs, and waterproofing patches will quietly lose 30 to 40 percent of its income to maintenance. This is where most foreigners feel blindsided. ROI wasn’t “wrong”; the villa simply wasn’t built to sustain ROI.

On the other hand, a villa with thoughtful ventilation, correct insulation, proper structural detailing, controlled moisture paths, and careful roof transitions becomes incredibly stable — both structurally and financially. The running cost stays predictable. Guest comfort stays consistent. And ROI becomes real instead of theoretical.

A real example from my inspections

Not long ago, I reviewed two villas on the same street in Pererenan. Similar size, similar target guests, similar nightly rates.

One was visually breathtaking — perfect online. But the roof had shallow slopes, the living room trapped heat, the bedrooms didn’t breathe, and the bathroom grout was already pulling moisture. The villa looked expensive but handled the climate poorly. The owner confessed, after a year of operation, that nearly half his “profit” went into correcting humidity problems.

The other villa looked quieter, simpler — almost understated. But it was built with intention. Breeze paths. Shaded glazing. Equal bedrooms. Proper membrane detailing. A clean drainage plan. Nothing dramatic, nothing fancy. Just good architecture.

Guess which villa is earning almost double the net return?

ROI is not a mystery. It’s simply the building telling the truth over time.

So what is a realistic ROI in Bali today?

Not what agencies promise. What the buildings themselves deliver. A poorly engineered villa can drop into the low single digits even with high occupancy. A typical mid-market villa, built quickly but not thoughtfully, lands somewhere between six and nine percent. A villa that respects the climate, the land, and the way guests live in Bali can sustain nine to twelve.

And those rare villas — the ones where architecture, location, and operation all line up — can push beyond that, but they’re the exception because they require discipline from the very first drawing. This is ROI from the field, not the sales deck.

If you want ROI, you need clarity before you buy

Every villa can look profitable when you’re standing inside it for the first time. Bali has that effect. But the only villas that actually perform are the ones whose structure, ventilation, waterproofing, and micro-location all work together.

If you want to understand a villa before you commit — its construction logic, its humidity exposure, its zoning, its drainage, its real maintenance load — I can walk you through it the way architects and operators evaluate property: Not by hope. Not by marketing. By how the building behaves.

We offer architectural due diligence, zoning checks, construction audits, and investment reviews for foreign buyers. Independent, zero commissions, no developer alignment — just clear answers that protect you before the problems begin. If you want a villa stress-tested before you buy, you can check our service here. The goal isn’t to find a perfect villa. It’s to find one that will stay profitable because it was built to survive Bali, not just photograph well.