Knowledge base · BDA · Bali Real Estate
How to read a Bali villa rental financial model
Where to start
What is a financial model, and where do you start reading it?
A financial model is a calculation laid out in a spreadsheet. Three things go in: price per night, occupancy, and expenses. What comes out is how much money the villa brings in per year and how many years it takes to pay off.
The classic beginner's mistake is to look straight at the bottom-line yield figure ("10% a year") and believe it. An experienced person does the opposite: they check where the price per night and occupancy came from and what was subtracted along the way. If those figures are pulled out of thin air, a pretty bottom line is worth nothing.
Below, we'll go through everything step by step using a single example: a three-bedroom villa with an entry price of $600,000.
Step 1 · Breakdown
How much does a villa actually earn?
An honest model shows every step from "how much the guests paid" to "how much the owner keeps" — not in a single line, but in order.
Of every dollar the guests pay, roughly 55 cents reaches the owner — the rest goes to the platforms and the management company. $78,000 a year from a $600,000 villa works out to about 13% a year. If the spreadsheet has no such breakdown and instead just states "net yield 55%", that's a bad sign: a good model shows every deduction, a bad one asks you to take it on faith.
The same example in numbers
Four figures that let you check any rental model
Step 2 · Price per night
Why should the model have TWO prices per night?
In an honest model, the price per night (ADR, average daily rate) appears twice: before fees and after. Between them sits money that never reaches the owner.
When a guest pays, say, $600 a night, not all of it makes it into the calculation. The booking site (Airbnb, Booking) takes its fee right away — roughly 14–18% (the exact percentage depends on the platform and the rate plan). About $500 is left — and that's still not the owner's money but revenue, from which the management company's fee and operating expenses are then subtracted.
So what matters in the model is not the shelf price but the one that remains after fees. If the spreadsheet lists only the shelf price and then jumps straight to "revenue", the income is overstated by exactly the fees they "forgot" to subtract.
Step 3 · Occupancy
How many days a year is the villa actually rented?
Occupancy is the share of the year the villa is rented. 65% occupancy means the villa is booked roughly 237 nights out of 365, and sits empty the rest of the time.
This is the most important and the most "slippery" figure in the model, because it directly multiplies the revenue. Here are three common tricks used to "nudge" it up.
Season instead of year
They show high-season occupancy (85%) and apply it to all 365 days. In the off-season demand is lower, and the yearly average works out to 60%. The model needs the figure for the whole year.
Expensive but empty
A villa at $1500 a night that's rented only 30% of the time brings in less than a villa at $400 with 80% occupancy. A high price per night doesn't equal high income.
A figure with no source
"It's usually 80% here" is not data. Occupancy has to be drawn from real comparable villas (the comp-set, more on it below), with a note on where it came from and as of what date.
Step 4 · Expenses
Where does the other 45% go?
About 55% of revenue reaches the owner. The other ~45% is three line items: platform fees (14–18%), the management company (15–20%), and other expenses (~10%). We break out management separately — it's a large item in its own right.
A simple rule: if the model leaves the owner more than 60% of revenue and doesn't explain why, then some expense line item wasn't accounted for. Most often what "goes missing" is the reserve for future repairs — and then the yield on paper looks higher than it will be in reality.
Other expenses — another 10% or so
- Electricity, water, internet — electricity in Bali is usually the biggest utility item.
- Staff — cleaning, gardener, pool maintenance, security.
- Ongoing repairs — air conditioners, the pool and appliances wear out from the heat and constant renting.
- Money for future major repairs (reserve) — the villa will need renovating in a few years, and this money is set aside in advance. This line item is the one most often "forgotten".
- Guest consumables and insurance — water, coffee, shampoo, toilet paper, linens.
Step 5 · Taxes
And what about taxes?
Rental taxes are usually administered on the operating side — by the same management company that handles bookings and settlements. So in the owner's model they are, as a rule, already included within the management company's share, rather than subtracted as a separate line on top.
The owner's personal tax burden is a separate story. It depends on how ownership is structured (individual, leasehold, a PT PMA company) and where the owner is a tax resident. That's a question for a tax advisor before the deal.
What matters when reading the model: it should be clear who pays which taxes, and whether they suddenly appear on top of the stated yield. If you're promised "55% net" and it later turns out taxes haven't been subtracted yet, that's a different yield.
- Who pays the taxes — you or the management company?
- Are they already in the shown yield or do they come on top of it?
- Which structure is the burden calculated from — an individual or a company (PT PMA)?
Step 6 · The main thing
The comp-set: why the whole spreadsheet is a blank sheet without it
A comp-set is a list of comparable real villas that are already being rented, with their actual prices and occupancy. It's exactly what answers the question "and where did you get these figures?".
Without a comp-set, the price per night and occupancy in the model are just wishes. You can't verify them, which means you can't trust them either. With a comp-set, you can open each property by its link and see for yourself.
The correct order is this: first you assemble the comp-set, and only then take the price per night and occupancy from it for the model — not the other way around. That's why a model without a comp-set is called a piece of paper: pretty figures with nothing underneath.
Genuinely comparable villas
The same area and even the same view (ocean vs. no ocean — different money), the same size and class. You can't compare your brand-new villa with old ones around the corner.
The data has a date
Prices and occupancy go stale. Figures from a year ago may already be lying — the sampling date should sit right next to them.
A live link to every property
The main sign that a comp-set is real and not drawn up for show: any villa on the list can be opened and checked.
| Column | What it shows |
|---|---|
| Property (listing) | a comparable villa: the same area, the same number of bedrooms, the same class |
| Days available | how many nights a year the property can actually be booked |
| Occupancy | how many of those nights are booked |
| Price per night | the property's average rate |
| Revenue per year | how much the villa collected over the year |
| Profit | how much is left after expenses |
| Link to the listing | a direct link to Airbnb / Booking — every figure can be opened and verified |
We don't give property names or specific figures here — this is an illustration of which columns should be present.
Two villas with the same number of bedrooms can be from entirely different worlds — and you can't compare their price per night and occupancy. What gives away "non-comparability":
- Some rooms are closed off. The listing shows a multi-room villa, but not all of it is rented. Yet with its large garden and spacious living room, it's already a whole different level of service — not "just more bedrooms".
- A villa on the grounds of a five-star hotel. Its price is held up by the infrastructure, the service and the hotel's name. A standalone house has none of that — yet the rate in the listing looks "like a comparable villa's".
And if your property is a compact 2-room townhouse with no infrastructure at all, it can't be lined up alongside such villas. These are not equivalent properties, and their price per night and occupancy are not comparable. That's why you open and check every row of the comp-set by hand, rather than taking it by name and bedroom count.
A bit deeper
Two more things that catch out beginners
The simple figure and the honest figure
One yield is calculated simply (income ÷ villa price) and doesn't account for time. Another (IRR) takes into account that the money doesn't come at once but over years — and it's almost always lower. If the villa only starts bringing in income after 2–3 years of construction, the honest yield is noticeably lower than the pretty one. These are different figures, and passing one off as the other is misleading.
What happens if things go worse
A good model shows not only the ideal case, but also what happens if the price per night or occupancy drops by 10–15%. If the villa is still in the black even then, the model is solid. If it goes into the red, the safety margin is zero.
Checklist
A short model checklist
Before you believe any yield figure, run through two lists: what the model must contain, and what should immediately raise a flag.
What must be there
- price per night after deducting platform fees, not just the shelf price;
- occupancy for the whole year, not for the best months;
- expenses itemized point by point, including money for future repairs;
- it's clear who pays the taxes and whether they arise on top of the stated yield;
- a comp-set with comparable villas, a date and live links;
- a bad scenario shown, not only the ideal one.
Red flags
- a "net yield" stated up front with no step-by-step breakdown;
- a price per night with no "before/after fees" label, and occupancy with no source;
- the owner keeps more than 60–70% of revenue with no explanation;
- there's no comp-set at all, or it has no links to real listings;
- a promise of "20% a year" in a round number and with no proof.
FAQ
Frequently asked questions
Short answers to what people ask most often about rental financial models.
What is a rental financial model in plain terms?
Why should there be two prices per night?
What is occupancy?
What is a comp-set and why is it needed?
How much money actually reaches the owner of a villa in Bali?
What should you look at first if you're not good with numbers?
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