Every property listing in Malaysia tells you the asking price and the expected rent. None of them tell you the number that actually matters: how much cash lands in your bank account every month after every single cost is paid.
That number is your net monthly cashflow. It takes five inputs, four steps, and about ten minutes to calculate by hand. Here's the exact framework we use to evaluate thousands of listings for our directory.
What You Need Before You Start
Gather these five numbers before you touch a calculator:
- Sale price — the agreed or asking price (e.g. RM 800,000)
- Expected monthly rent — based on active rental comparables in the same area, not the agent's "potential rental" figure
- Maintenance fee per sqft — check the management corporation or strata title documents (typical range: RM 0.20–0.50/sqft)
- Financing terms — margin of financing (typically 90%), profit/interest rate, and tenure in years
- Your tax bracket — Malaysian resident or non-resident, and approximate chargeable income range
If you're missing any of these, stop and find them first. Cashflow math with estimated inputs produces estimated results — and estimated results lead to real losses.
Step 1 — Calculate Monthly Financing
This is the biggest line item. Whether you're using Islamic financing (Musharakah Mutanaqisah, Tawarruq) or a conventional loan, the monthly payment follows the same amortization formula:
M = P x [r(1+r)^n] / [(1+r)^n - 1]
Where:
- P = principal (sale price x margin of financing)
- r = monthly rate (annual rate / 12)
- n = total months (years x 12)
For Islamic financing, substitute "profit rate" for "interest rate" — the math is identical, the structure differs. The key difference is that Islamic facilities lock in the profit rate at drawdown for the full tenure under most Musharakah Mutanaqisah products, while conventional loans are typically variable (BLR - spread).
Worked example — Islamic financing:
- Sale price: RM 800,000
- Margin: 90% -> P = RM 720,000
- Profit rate: 4.0% -> r = 0.04 / 12 = 0.003333
- Tenure: 35 years -> n = 420 months
M = 720,000 x [0.003333 x (1.003333)^420] / [(1.003333)^420 - 1]
M = 720,000 x [0.003333 x 4.0387] / [4.0387 - 1]
M = 720,000 x 0.01346 / 3.0387
M = RM 3,187/month
Conventional equivalent:
At BLR - 2.25% (effective ~4.35%), the same loan comes to approximately RM 3,350/month — RM 163 more per month, or RM 1,956 per year. Over 35 years, the Islamic facility saves roughly RM 68,000 in total payments. This is why financing type matters more than most investors think.
Step 2 — Calculate Monthly Operating Costs
Everything that isn't your loan payment but still leaves your wallet:
Maintenance + sinking fund: The strata management fee plus the sinking fund contribution (typically 10% of maintenance). A 1,000 sqft condo at RM 0.35/sqft = RM 350 maintenance + RM 35 sinking fund = RM 385/month.
Insurance proration: Fire insurance (required by your bank) and optional home contents insurance. Budget RM 500–1,200/year for a typical condo, or roughly RM 40–100/month.
Assessment tax (cukai taksiran) + quit rent: Varies by local council. For a condo in KL/Selangor, expect RM 500–2,000/year combined, or RM 40–170/month when prorated.
Total typical operating costs for a Malaysian condo:
| Component | Low Estimate | High Estimate |
|---|---|---|
| Maintenance + sinking fund | RM 250/mo | RM 700/mo |
| Insurance (prorated) | RM 40/mo | RM 100/mo |
| Assessment tax + quit rent (prorated) | RM 40/mo | RM 170/mo |
| Minor repairs allowance | RM 50/mo | RM 100/mo |
| Total operating costs | RM 380/mo | RM 1,070/mo |
For landed properties, drop the maintenance fee but add garden/exterior maintenance and potentially higher insurance premiums. Most condos fall in the RM 500–800/month range for total operating costs.
Step 3 — Calculate Effective Rent
Gross rent is what your tenant pays. Effective rent is what you actually keep. Two deductions most investors forget:
Vacancy allowance — 8.3% Budget 1 month of vacancy per year. That's 1/12 = 8.3% off your gross rent. Some areas run higher (new developments, oversupplied markets), some lower (established neighborhoods near transit). Use 8.3% as baseline.
Agent fee amortized — 4.2% Standard agent commission is 1 month's rent for a 2-year tenancy agreement. Spread over 24 months, that's 1/24 = 4.2% of monthly rent as an ongoing cost.
Combined deduction: 12.5%
Worked example:
- Gross rent: RM 3,500/month
- Vacancy allowance (8.3%): -RM 291
- Agent fee amortized (4.2%): -RM 147
- Effective rent: RM 3,062/month
That RM 438 gap between gross and effective rent is real money that many investors only discover after the first year when their tenant moves out and the unit sits empty for six weeks.
Step 4 — The Cashflow Number
The formula is simple:
Net Monthly Cashflow = Effective Rent - Monthly Financing - Monthly Operating Costs
A positive number means the property pays you. A negative number means you pay the property. Here are three worked examples at different price points, all using 90% Islamic financing at 4.0% over 35 years:
| Budget Condo | Mid-Range Condo | Premium Condo | |
|---|---|---|---|
| Sale price | RM 400,000 | RM 800,000 | RM 1,500,000 |
| Gross rent | RM 2,000/mo | RM 3,500/mo | RM 7,500/mo |
| Gross yield | 6.0% | 5.25% | 6.0% |
| Loan (P) | RM 360,000 | RM 720,000 | RM 1,350,000 |
| Monthly financing | RM 1,594 | RM 3,187 | RM 5,976 |
| Effective rent (87.5%) | RM 1,750 | RM 3,062 | RM 6,563 |
| Operating costs | RM 420 | RM 650 | RM 950 |
| Net monthly cashflow | -RM 264 | -RM 775 | -RM 363 |
| Adjusted if rent +15% | +RM 36 | -RM 250 | +RM 762 |
The pattern is clear: at current financing rates, you need a gross yield meaningfully above 5.5% to break even — and even then, operating costs can push you negative. The budget condo at 6.0% yield nearly breaks even; a slightly higher rent (RM 2,300) tips it positive. The mid-range condo at 5.25% yield is firmly negative — this is the classic "looks good on paper" trap.
The premium condo breaks nearly even at 6.0% yield because operating costs are a smaller proportion of rent at higher price points. This is a pattern we explore further in our analysis of gross yield versus net cashflow.
The takeaway: chase yield, not price. A RM 400,000 unit at 7% yield will outperform a RM 1,500,000 unit at 5% yield on a cashflow basis every single month.
Step 5 — Tax-Adjusted Return
Rental income in Malaysia is taxed as part of your chargeable income. The impact depends on whether you're a tax resident.
Malaysian tax residents — progressive rates from 0% to 30%:
| Chargeable Income | Tax Rate |
|---|---|
| First RM 5,000 | 0% |
| RM 5,001 – RM 20,000 | 1% |
| RM 20,001 – RM 35,000 | 3% |
| RM 35,001 – RM 50,000 | 6% |
| RM 50,001 – RM 70,000 | 11% |
| RM 70,001 – RM 100,000 | 19% |
| RM 100,001 – RM 400,000 | 25% |
| RM 400,001 – RM 600,000 | 26% |
| RM 600,001 – RM 2,000,000 | 28% |
| Above RM 2,000,000 | 30% |
For most salaried professionals investing in their first or second property, rental income falls into the 19–25% marginal bracket. On our mid-range example netting RM 3,062/month effective rent, that's roughly RM 600–765/month in additional tax liability — pushing an already negative cashflow further into the red.
However, you can deduct allowable expenses (loan interest/profit payments, maintenance fees, assessment tax, insurance, repairs, agent fees) from gross rental income before tax is applied. This significantly reduces the taxable amount and in many cases brings the effective tax on rental cashflow close to zero for the first several years of ownership.
Non-residents — 30% flat rate with no personal reliefs or deductions against rental income. This applies to foreigners and Malaysians who do not meet the 182-day residency requirement.
For Singapore Buyers
If you are a Singapore-based buyer investing in Malaysian property, you will likely be classified as a non-resident for Malaysian tax purposes unless you spend 182+ days per year in Malaysia. Use the 30% flat rate in your cashflow model and note that you cannot offset Malaysian rental losses against your Singapore income. Factor this into your break-even calculation — it often means you need gross yields above 7% to achieve positive after-tax cashflow on cross-border investments.
When to Skip the Spreadsheet
The five-step framework above works for any property. But running it manually across dozens of listings gets tedious fast — especially when you want to compare Islamic versus conventional financing, test different down payment scenarios, or screen an entire neighborhood for cashflow-positive opportunities.
PropCashflow.my runs this exact calculation on every listing in our directory automatically. Each property page shows the net monthly cashflow under both Islamic and conventional financing, with adjustable inputs for your down payment, rate, tenure, and tax bracket. The numbers update in real time.
If you've made it through this guide with pen and paper, you already know more about rental cashflow than 90% of property investors in Malaysia. The next step is applying it at scale.