Equity Gain is proud to launch our latest endeavor stretching beyond our local boarders and into Indonesia.
With tourism numbers increasing back to pre-pandemic numbers and old accommodation no longer favorable, Bali offers extremely unique opportunities for savvy investors that are simply not achievable in Australia.
This is the obvious first question. The answer needs to be broken down into several parts though to gain a full understanding as to why we are turning our focus to Bali for investment. Here’s the main reasons why we want to offer this opportunity to our clients.
In Australia the owner of the land is the homeowner (title holder). There are a few different types of land titles depending on what the landowner owns, but mostly they prove the landowner has a title deed to their land. In Bali this is the same under the Free Hold land option which is only available to Indonesian people. No foreigner can own a Free Hold title in Indonesia, in their own name by local law. As a foreigner you have a different option known as Lease Hold.
This option is seldom understood at first by homeowners of countries outside of Indonesia. As an Investor, you don’t need to own the land to make a profit. This is a very different concept than many people would grasp at first. Rather than owning the land, you can control the land and any assets built on this land through what is known as a Lease Hold agreement. This agreement is common place in Indonesia and holds full legal weight to both parties.
Lease Hold gives the lease hold owner the same rights as the land owner for an agreed amount of time, without actually ever owning the land. Normally a new lease hold agreement will be approximately 25 – 30 years and this can also be extended for another 20 – 30 years based on the land owners agreement. These agreements are officially completed through a legal service known as a Notary, which provide both the land owner and the lease hold owner their rights to the land over the agreed term.
There are many benefits to being the lease holder over the Land owner. There are no land taxes paid by the lease holder as the land owner must pay these. The entry price is much lower as the land is basically being rented for an agreed time rather than purchased outright. This allows a much higher return on investment as the person renting the villa doesn’t care who is the land holder and who is the lease holder. The renter simply pays the rent.
This unique opportunity allows the lease holder to control the property and bank the rent payments each month.
Low cost of entry is permitted by each investor sharing in the total cost of the land and construction through our fractional ownership model. We specialise in sourcing the right area for the type of villa being built to maximise the rental return on a smaller budget.
Since the land is leased and not bought outright the numbers of the investment are now heavily weighted towards the lease hold owner when it comes to positive cash flow. There is absolutely no debt on any property which remove the need for repayments to be added to the expenses. There are also no annual land taxes to pay as these are paid by the land owner. You simply need to cover any maintenance costs and management costs of the villa and then bank the returns allowing for a much higher ROI than in most other countries. Depending on the rental type the lease hold owner may also be responsible for electricity, water and Insurance.
Bali has always been a favorite place for Aussies to holiday due to the close proximity of Australia. Aussies get out of the winter blues and into tropical surroundings to escape the cold.
Many other Asian countries with money to spend have now also found this hidden gem in the south. Rental demand has never been stronger than it is right now.
Through our Bali Invest package, investing into Bali has never been so simple. We look after all aspects of your investment on your behalf and introduce you to Accountants, Notary’s, Lawyers and Property Management companies that will handle the day-to-day processing of your investment. It really couldn’t be any easier than this to invest in a foreign country.
Very few people will ever have the opportunity to hear about this unique investment opportunity known as a “Fractional Ownership Model”. What is it and how does it work? This model has been designed to allow any investor with a minimum of $25,000 AUD to own their piece of paradise in Bali, Indonesia. Not only will you be assisting the local Balinese community to rebuild following Covid-19, but you will be investing your cash for a cash-on-cash return not seen in many investment opportunities.
This model allows for multiple investors to combine their funds to co-own an entire development and gain their fair share of the entire development’s returns. If you own one small villa and there is no tenant, this means that you have expenses to pay without any income. A smarter way to invest is to use your capital over several villa ‘s or one large villa and share in the total expenses and total income. This allows for a steady positive income from day one of the investment. Most investments offered will have a minimum investment unit price of $25,000 AUD.
This will mean that if a total development costs $1,000,000 AUD then there will be 40 units available for purchase. Any investor can purchase any number of available units until sold out. The investment is based on a 10-year minimum hold, and it is expected that your total capital will be recouped within this period of time as well as cash flow profits based on the actual rental occupancy and daily amount received, less expenses. It is our goal to receive a minimum of 12% net return from each project and some projects have returned up to 18% to investors.
This investment is for a set period of 10 years. The property will be sold by your management company or their preferred local real estate office, for the market price, at the end of this term. Although the investment is secured for a minimum of 10 years, any investor can sell their unit/s to another investor at any time for an agreed price between the investors. It is agreed that any investor that wants to sell their unit/s prior to the 10 year mark must give first right of refusal to other investors within the project. If there is no agreement for sale of the unit/s held then the investor is free to sell their unit/s to anyone they chose at the rate they want to sell for. This allows for a more liquid property ownership than standard real estate as you are not needing to sell the entire development.
As a unit holder you have the right to sell your units at any time to anyone. The price you choose to sell your units for is between you and the purchaser. There is no restrictions on this at all. Your accountant can also ask if any other unit holders would like to buy out your units by request.
Our staff will walk you through this very simple process step by step. Equity Gain will work with clients interested in buying units within the project until all the units are sold and the project is funded to capacity. At this point Equity Gain can then move forward on the established property selection process. Equity Gain will always have a list of properties available that meet our selection criteria as we are consistently working with the local agents. Once a property has been selected, the team at Equity Gain will sign a contract with the seller, on behalf of the project through our Power of Attorney provided by the investors.
The Notary will pay a 10% deposit whilst the due diligence checks are done to hold the property. The Indonesian Notary will then start going through due diligence on the property to ensure it meets all the checks and balances required for a safe transition from the current owner to the new owners. This is a critical part of the transaction to ensure that we are buying the property off the actual real landowner and that no liens, taxes or debts are secured to the property. If there are any faults found at this point, we simply have the deposit returned to the Notary and we source another property.
Once all the checks are completed, the property will be paid for in full and settled into the investors names with all investors having their name added to the leasehold agreement. The Notary will complete another document known as an Owner Charter, which will reflect how many units each owner has purchased. The settled property is then handed over to your property management company.
The property management company will then look after all aspects of the villa from cleaning staff, maintenance staff, pool staff etc. They will run the villa like a hotel ensuring the property is always in peak condition. They will handle all the monies coming in and out and pay the proceeds of the rental income to the investors on a quarterly basis.
It really is that simple!
It really is that simple
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