The Hidden Opportunity in Bali Real Estate: Retirement Communities, Villas, and International Investing

Neill Kramer (00:00)
Well, honestly, and my age is going to give it away, but I do think retirement communities, they don’t have that in Bali. And I have been talking about it for about three years now with investors and other builders. And the hospital situation has gotten much better in the last few years.

Scott Bursey (02:01)
Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host Scott Bursey. And today we are taking the conversation global. We’re shifting our focus far beyond the mainland to talk about the high stakes, high reward game of international real estate and new construction. Our guest, Neill Kramer brings the fuel of a true pioneer in American expat who is navigating the complex market of Bali, Indonesia. Pros.

Get ready to rev up your global vision. Neill, welcome to the show.

Neill Kramer (02:37)
Thank you, Scott.

Scott Bursey (02:38)
It is just awesome having you here and for our listeners who may not be familiar with your journey, please give us the front row seat and how did your career ignite and where are you putting your fuel now?

Neill Kramer (02:53)
Well, ⁓ I grew up in New York, but I spent over 20 years in California. I was involved in Silicon Valley, mostly startups. Most of them failed, but you just need a couple, one or two winners and things are good. And I really enjoyed my time as an entrepreneur in Silicon Valley. But when I turned 50,

And especially when I turned 55, ⁓ the opportunities ⁓ were far less. And that’s mostly because it’s a young people’s game. And I had decided that I need to pivot, change my focus. And I had always loved architecture. ⁓ I had built a home.

in Silicon Valley. did buy land and we worked with an architect there. We had the house built. It turned out great. We lived there for about seven years. ⁓ And then I realized I can do that. I went to the wine country, you know Sonoma and Napa Valley. ⁓ Napa is number one, Sonoma is number two. I went to Sonoma. bought ⁓

little around around under an acre and hired an architect and put together, you know, basically a spec home, I guess you would call it and sold it within.

30 days and people said, wow, this, could turn this into a business. ⁓ And I did it again, but I moved up to Washington state where the real estate I thought would be less, which it was. then the cost per square foot, I thought that would be less. And it was, it wasn’t dramatically less, but it was Seattle had boosted prices all within a two hour area of

of where I was and ⁓ so prices were better than California, but still the money I had was just enough to get the land, get an architect, build it and then sell it.

Unfortunately, I couldn’t build two homes, one for myself and one to sell. So I had started to realize that as much fun as it is to

get a piece of land, turn it into a beautiful home, a unique home, a solid home with some character that sells fairly easily. The downside is the lifestyle of being, I had divorced, so I was single and I was in a town that was new to me. I didn’t know a lot of people. And after work was done, I was pretty much on my own.

And even though I enjoyed the process, I realized, you know, this is not going to be a good long-term solution. So that’s when I did some traveling in between these types of projects. went to Thailand for a month and then, you know, did, you know, came back and did spec home. And then I went to Bali for a month. I went to Vietnam. split.

of Vietnam and Cambodia two weeks and two weeks. But when I got to Bali, I really just fell in love with the people. You know, it’s an island. The Balinese are very unique spiritual people. And there’s a lot of entrepreneurs here. So I thought, okay, you know, what can I do in Bali?

Scott Bursey (07:48)
That is such a fascinating origin story. led to Bali. Yes. That journey ultimately led to Bali. Wow. that’s, remarkable from Silicon Valley to Bali. You know, Neill, what really caught my attention about you was the way that you’ve been able to execute new construction projects in a challenging and exotic market like Bali.

Neill Kramer (07:48)
So that’s it, it led to Bali. Thank you.

Yeah.

He he.

Scott Bursey (08:15)
leveraging over 10 years of experience to successfully bridge American investment standards with local development realities. That’s not easy.

Neill Kramer (08:30)
No, it’s not. mean, part of it is, you meet people like even in California and Washington state when you’re doing… know, I can’t go to a bank as a developer, so I’m funding this. So I meet every single subcontractor. You know, if I’m getting two bids or three bids on roofing or plumbing or electric, you know, I’m going to meet these people and look them in the eye and…

and get their prize. And I don’t necessarily go for the lowest prize. Most of the time, I don’t go for the highest prize. But I’m also looking for trust and a relationship. when someone gives me a bid, it’s solid. ⁓ so, you have to trust your instincts, but you have to build a certain amount of… ⁓

knowledge about how to read people. And when you get to Bali, of course, you have a language barrier and you have a cultural barrier. But people are people. And so the person I hired the very first time was just the guy that just the team that did our road. We, you know, we bought land, maybe, I don’t know, let’s say 600 feet away from the road. And so we needed a private road to get to the land.

And I didn’t expect this person to be our builder. I thought he was just a road builder initially, but I just got along with him so well that when it came time, when I had the architectural plans, I showed it to him and he said, you know, I build, I build houses too. ⁓ really? I didn’t know that. So, you know, one thing led to another and, he ended up building it and, you know, came in.

pretty much what he said, more or less. There were some finishes and extras that I added beyond the plans. And of course, you I have to pay for that above and beyond. But I guess the bottom line, Scott, is reading people, learning about people. And of course, you’re never going to win 100%. And you hear stories about

people coming to Bali, they give a deposit to a builder and the next thing you know, they’ve changed their phone number, they’ve removed their SIM card and that’s it. You can’t find them and you might be out, you know, 10 or $20,000, whatever you put down as your first deposit. And you do hear about stuff like that, of course, but I think anywhere you go, you know, there’s risk in terms of

hiring people and having them come through for you.

Scott Bursey (11:58)
Neill, now that we’re locked in on your journey, let’s fire things up. I want to draw out the high level fuel only you can bring to our pros. What is the biggest advantage of being an expat with who understands both US investor expectations and the international construction process?

Neill Kramer (12:20)
Okay, well here’s the thing, you know, when I built on my own, you know, I can’t get the type of discounts a big developer can get. I’m not buying at retail because the subcontractors can get discounts and, you know, I will buy through them. But in general, you know, I am paying more than what a developer would

And so I would try to keep the cost down, but still, you know, I would be facing, let’s say a plumber that’s $85 an hour or something like that. You know, when you do the math, you know, I had built a 1600 square foot branch type house in Sonoma and

I think it was 600 and something thousand dollars, brand new in that range. I couldn’t get the costs lower, however I tried. When I came to Bali, I realized that it’s a dramatic difference. So you’re looking at under $70 a square foot and it’s concrete.

two by fours. It has to be concrete because it’s tropical and there’s termites and there’s all kinds of insects here. ⁓ So a wood construction home, they do have it, but it’s usually hardwood. It’s usually like a teak type of wood ⁓ from Java and you can’t build with it, but you have to be really good about

protecting it and keeping it out of the rain and all that stuff. And there’s some heavy tropical rain. So I don’t recommend wood, people do it because I like that feel. But when you’re looking at this, just a square footage calculation, you know, I was able to build a boutique hotel that was almost around 4,500 square feet.

for under $700,000. It had seven rooms, ⁓ four loft rooms, two standard rooms, and an apartment for myself and my wife. And we made a living renting out the rooms after the construction was done. I had never owned a…

boutique hotel or guest house, whatever you want to call it. ⁓ But that was another part of the journey is like, I had thought, you know, wouldn’t it be nice to have your own little boutique hotel?

of course, in America might be 2 million or 3 million or $5 million to do something like that. But you can do it for under a million just because

I mean, I’ll give you a shocker. The average minimum wage worker here makes around $350 a month. ⁓ specialists like plumbers and electricians don’t charge by the hour, they’re charging by the project. And the numbers are just dramatically different. So, you know, let’s just say they’re

20 to 25 % of what you would pay in the US. So then your imagination can go further in terms of, like I said, I like working with architects so I can say to them, let’s design a boutique hotel and I’ll get the numbers on that. And can I make it work, technically, financially, et cetera?

And if I can, ⁓ I’ll do it. And if I know it’s in an area that’s, you know, where the tourists are coming, worst case scenario, if I can’t rent it out for some reason, which I had not really a problem doing that, but if worse came to worse, and this is where, you know, plan B kind of thinking is like, okay, the land itself will go up because it’s an up and coming tourist area.

and someone can buy it and redesign it because it’s a concrete building. can have all kinds of, know, redesign of paint and colors and make it look different depending on who’s coming in. worst case scenario, I thought I can break even. And in fact, I did sell it after COVID. I had gotten a little tired of the tourist business, you know, being a host and

I lived there and so I dealt, you know, I was the manager and the owner. And I realized I’m more of a back office type person, know, hospitality is a certain type of personality. You have to stay upbeat even if the guest is unappealing. And so that’s not my thing. So I ended up selling it, but I did okay. mean, I didn’t, you know, I mean,

I did okay. I could have done better if I held on to it longer, but I like moving on to new projects as well.

Scott Bursey (18:49)
I must say that dual perspective is invaluable. It’s the competitive edge that translates into truly unique and profitable assets. Now let’s shift gears here just a little bit. With the current pause in new deals over the last 12 months, what’s the biggest constraint on restarting single-family residential deal flow while being based overseas?

Neill Kramer (19:17)
⁓ Well, know, the market is choppy because of the political situation. know, if airfare, if airfares go up, ⁓ there will be less tourism, less travel to exotic parts of the world. If you’re in Australia, though, going to Bali is similar to being in LA and going to Hawaii, that kind of thing.

So they will always be coming from Australia. It’s not going to be a huge impact. But if you’re coming from Europe and you have to buy a plane ticket to go halfway around the world or from New York, it’s going to be expensive. there’s an impact there. But honestly, Bali is a peaceful island.

world’s problems, ⁓ violence, crime, ⁓ crazy inflation. You don’t really have that here. The government is a democracy and it’s the fourth most populated country in the world. There’s something like 17,000 islands in Indonesia. But for example, from a cost of living point of view, they do cap things.

because of the low wages. So rice will always be a low price, a gas and car fuel and things will always be a low price for the population. ⁓ My telephone bill is like, ⁓ I think I get five gigabytes for $4 a month, something like that. It’s remarkable. ⁓ The banking here,

I can use my phone and bank and when I transfer at a restaurant, for example, it literally takes less than two seconds usually and the transfer has been done. So some of the infrastructure is state of the art and some of it’s really ⁓ old school or developing world, whatever you want to call it.

So you have to be, I guess, you the bottom line in terms of challenges, you have to be willing to roll with the punches because it’s not going to be by the book, you know, just, you know, let’s go over to the county and file the papers and it’ll, you know, in 20 days, you’re going to have, you know, your, your inspectors come out and blah, blah, blah. And it’s all orderly. No.

It’s its own thing that you have to adjust to.

Scott Bursey (22:11)
And what is the population of Bali?

Neill Kramer (22:14)
Four million people, but it’s out of 17,000 islands, think it’s 40 % of the revenue of the entire country is just one island, it’s in Bali, because it’s the famous one.

Scott Bursey (22:30)
Neill, very curious on this. What unforeseen or emerging niche within Bally’s single family new construction market presents the greatest opportunity for high margins today.

Neill Kramer (22:43)
Well, honestly, and my age is going to give it away, but I do think retirement communities, they don’t have that in Bali. And I have been talking about it for about three years now with investors and other builders. And the hospital situation has gotten much better in the last few years.

international hospital at the Mayo Clinic was a consultant on, you may know the Mayo Clinic, and they actually changed the law for the entire country. Before the Mayo Clinic got involved, you had to be an Indonesian doctor only. A foreign doctor couldn’t practice.

in Indonesia. Now any foreign doctor could practice in Indonesia. ⁓ international care, know, high standard international care is now in Bali. And that means that ⁓ for seniors, you know, there’s a hospital that you can go to. There’s tons of hospitals, but if you want the state of the art, ⁓ it’s finally here in Bali.

course, you’re have to pay for it. can’t buy, can’t use your social, you know, Medicare or anything like that. But prices are also dramatically different, you know, here for care. ⁓ So, you know, why isn’t there more, any, and there’s no retirement communities. And I think part of it was

There was a risk of what happens when you do get older in your 80s and you will eventually need good medical care. But now it’s here. They just opened last year and there’s a lot of new initiatives that are coming out of that. I have one Australian friend who said he is trying to build a 350 unit.

retirement community. ⁓ It’s not real yet. But for me, that’s a missing piece that I think is a natural. example, ⁓ getting massages, getting someone to clean your room, getting ⁓ good staff. If you go on a cruise ship anywhere in the world, you’ll probably encounter

Balinese staff because they’re famous for being friendly. They’re famous for having these genuine smiles and being genuinely nice people because they grew up with high spiritual standards. And just like the Philippines has a lot of nurses, ⁓ the Balinese are tremendously good in hospitality. So if you’re retired, you’re going to want

friendly people are going to be around to care for you and not break the bank. So it’s already here. All that’s already here. And so I think that’s a tremendous opportunity. And again, of cost of construction, you might be able to offer something for, I don’t know, $175,000 to $225,000 for

I now think in square meters, but 70 to 90 square meters. I don’t know what that translates to, but it’s a very nice size apartment. You know, all air condition, know, decent appliances. You’re not talking about half a million dollars for, you know, 200,000 would get you very nice.

Scott Bursey (26:54)
The pros who can spot the next wave, whether it’s sustainable builds or a new location, are always the ones who win big. Neill, what specific regulatory or land ownership threat do US-based investors overlook most often when considering overseas real estate projects?

Neill Kramer (27:04)
No.

Yeah, I mean, you do have to have ⁓ good ⁓ legal help. ⁓ typically, you have to set up ⁓ an Indonesian company. could have a Singapore company own the Indonesian company, you could have an American company own it, or you could just have an Indonesian company where you’re a majority ⁓ owner yourself. I think you do need one Indonesian person on the

on the board at a very low level, like under 1 % or something like that. But yeah, you’re the majority owner, you have to capitalize it with, I think the minimum might be

maybe half a million dollars or something like that. But if you’re going to build something, ⁓ you’ll use that money towards building. And then there is a time capsule with that because ⁓ foreign owned ⁓ companies ⁓ still are restricted in that they can never own the land itself. So you can own it for a maximum, I’ve heard about 80 years. ⁓

If you have partners that are Indonesian, they can own it in their name permanently. But if it’s a company name ⁓ and it’s a foreign company, then the land itself cannot be yours because the Indonesian law is that only Indonesian citizens. I never looked into giving up my citizenship.

But maybe if I became an Indonesian citizen, maybe I could own it, but I never looked into it. But yeah, those are some of the challenges. But 80 years is plenty time to make money. Most villa owners, for example, who have, you know, let’s say you’re Australian and you want to come to Bali one month a year or two months a year or six weeks a year, you’ll get a villa management company to manage it for you.

And they’ll take up to 20%, 15%. And within about 10 years, so if you had a normal standard 30 year lease that will expire after 30 years, you’ll get 20 years out of that 30 that should be profitable for you and free vacations, you know, during that time. So that’s what a lot of Australians do.

Scott Bursey (29:50)
Yo!

And rightfully so, you know, and I know that our listeners are going to want to hear this from you. When building in Bali, what is the fastest way to reliably source materials and manage labor quality control from thousands of miles away?

Neill Kramer (30:14)
Well, you wouldn’t want ⁓ to manage it from thousands of miles away. You’d want to have boots on the ground. You’d want to have a project manager. you can hire an architect that has their own ⁓ construction ⁓ subsidiary where you’re doing a package deal. You’re going to get the architect and you’re going to use their builder. And then you’re to have on-site

management and you could say in the contract I want daily videos or weekly videos or milestone videos, whatever you want to put in there. And you could potentially manage quite a bit remotely, but I would fly here and interview three or four teams like that and decide who you want to work with. ⁓

And it’s possible because today, I mean, the digital nomads that come here, they basically, you know, are getting salaries from Europe, salaries from America, and they come to Bali and they’re paying, you know, $1,500 a month, $2,000 a month for room, board, going out at night, you know, restaurants, etc. And if they’re earning

whatever, 50, 60, $80,000 a year, they’re doing a lot of saving at the same time, living the Bali life and going poolside with their laptop and stuff like that. So it’s all possible nowadays. And I saw it all happen because eight years ago, there weren’t too many digital nomads, but now there are thousands of

Scott Bursey (32:11)
Yes, infrastructure and supply chain mastery. That’s what separates a project manager from a true asset builder. And Neill, it’s time for the money question, where you supply the high octane fuel. For a real estate pro who is currently taking a deliberate pause, whether by choice or due to market conditions, what is the most critical high leverage activity they should focus on?

to explode out of the gate when they decide to start building or buying again.

Neill Kramer (32:48)
⁓

Well, I mean, I think my perspective is a little different because I finance everything myself. So I’m very careful about outlaying money and when I do and if I’m working with a builder, I don’t give much of an upfront payment. I’m going to be there on site every day. I’m going to make sure when the bill comes, I pay it within 24 hours.

trust. I build the trust as quickly as possible. ⁓ But I’m not a company. If I was a company, there would be a structure that you can follow. But my structure is very hands-on because it’s up to me to make the whole thing happen. And if I get a

If for some reason the trust is getting lost, which never happened, but if it did, ⁓ how can I find where they’ve gone with the money? Even if they give me their address, it’s not so easy to go get the money back or go to a court and say, hey, I gave this guy money he didn’t deliver or the building is…

the walls are curved or whatever. ⁓ So it’s all being on site almost every day and just making sure you get that trust.

Scott Bursey (34:29)
Sure. Trust is key. Thank you for that, Neill. And listeners, Neill’s journey proves that the best investors see past borders. If you have unique expertise in a specialized international market, learn how to package and sell that specific knowledge. It’s a massive, competitive advantage. Neill, this has been an incredible discussion. You brought the fuel today. For those of our listeners that would like to…

Neill Kramer (34:56)
Ha ha.

Scott Bursey (34:58)
follow your journey or collaborate with you, what is the best way for them to reach you?

Neill Kramer (35:03)
a good question. ⁓ I mean, if you can give my email out, that would be great. ⁓ [email protected]. If you want to contact me directly, I think that’s the best way. Keep in mind that any kind of project real estate wise is going to be, you

two years by the time you get it all together. ⁓ But ⁓ I’ve really enjoyed what I’ve done here in Bali. There are setbacks like in any project, but ⁓ it’s a beautiful place. It’s tropical year round. ⁓ I never have a sweater. I’m always wearing shorts and flip-flops. So if that’s the lifestyle,

that you’re interested in, ⁓ you can make things happen in BOP.

Scott Bursey (36:06)
Thank you for joining us today, Neill.

Neill Kramer (36:09)
Okay, thank you, Scott. It’s been really great, really fun. Take care.

Scott Bursey (36:14)
And

to our listeners, we appreciate each and every one of you. If you got value from today’s episode, please subscribe. We’ve got a lineup of exceptional guests, just like Neill Kramer, who are making huge moves in the market and the international market. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.