The most common question we get from new property investors: "This condo yields 5.8% — is that good?" The honest answer is: it depends entirely on the 12 costs between gross rent and your bank account.
Gross rental yield is a useful filter, but it tells you almost nothing about what actually hits your pocket each month. A property yielding 6.5% gross can bleed money. A property yielding 5.2% gross, with the right cost structure, can be quietly cashflow-positive under Islamic financing.
This post breaks down every ringgit that stands between gross rent and net cashflow — with a worked example on an RM 800,000 condo.
Why Gross Yield Misleads
Gross yield is just the top line:
(Annual Rent ÷ Purchase Price) × 100
An RM 800,000 condo renting at RM 3,500/month produces a gross yield of 5.25%. Looks reasonable. But gross yield ignores financing costs, taxes, maintenance, vacancy, and a half-dozen other line items that collectively consume 35–55% of that rental income.
The result: investors buy on gross yield, then discover 18 months later that the property costs them RM 400–800/month to hold. That's not investing — that's subsidizing your tenant's housing.
The gap between gross yield and net yield in the Malaysian market typically ranges from 1.5% to 3.5%, depending on financing structure and property type. If you don't know your gap, you don't know your cashflow.
For context on where gross yield fits in a broader evaluation framework, see our guide on 5 signs a property will be cashflow-positive.
The 12 Costs Nobody Talks About
Here's the full inventory of recurring and amortized costs that determine your actual monthly cashflow. We've organized them into a per-month basis for an RM 800,000 property financed at 90% LTV over 35 years.
| # | Cost Item | Typical Monthly (RM) | Notes |
|---|---|---|---|
| 1 | Mortgage / Financing | 2,800–3,200 | Conventional 4.35–4.5%; Islamic 3.95–4.15% |
| 2 | Maintenance Fee | 200–500 | RM 0.20–0.50/sqft depending on property type |
| 3 | Sinking Fund | 30–75 | Typically 10% of maintenance fee |
| 4 | Quit Rent (Cukai Tanah) | 5–25 | Annual; varies by state. Strata units lower. |
| 5 | Assessment Tax (Cukai Taksiran) | 50–150 | Semi-annual; based on local authority valuation |
| 6 | Fire Insurance / Takaful | 30–60 | Required by lender. MRTA/MRTT separate. |
| 7 | Rental Income Tax | 0–350 | Progressive rates after allowable deductions |
| 8 | Agent Commission (amortized) | 80–150 | One month's rent per tenancy, spread over 12 months |
| 9 | Vacancy Allowance | 290–350 | Budget 1 month per year minimum |
| 10 | Furnishing Depreciation | 100–250 | RM 15K–30K furnishing over 8–10 year lifespan |
| 11 | Stamp Duty on Tenancy | 10–30 | Per Stamp Act 1949; scales with rent and duration |
| 12 | Opportunity Cost | 165–330 | What your 10% down payment earns in FD/ASB at 4–5% |
Total hidden costs: RM 960–2,270/month on top of your mortgage payment.
Most investors account for items 1–3 and stop there. Items 7–12 are where cashflow projections quietly fall apart.
Worked Example — RM 800K Condo
Let's model a realistic scenario: a 1,000 sqft condominium in a mature development in the Klang Valley.
Assumptions:
- Purchase price: RM 800,000
- Monthly rent: RM 3,500 (gross yield: 5.25%)
- Financing: 90% LTV, 35-year tenure
- Maintenance fee: RM 0.30/sqft (RM 300/month)
- Fully furnished (RM 20,000 fitout)
Scenario A: Conventional Loan at 4.40%
| Item | Monthly (RM) |
|---|---|
| Gross Rent | +3,500 |
| Mortgage (RM 720K at 4.40%, 35yr) | −3,150 |
| Maintenance Fee | −300 |
| Sinking Fund | −30 |
| Assessment Tax | −83 |
| Quit Rent | −8 |
| Insurance | −40 |
| Rental Tax (est. after deductions) | −120 |
| Agent Fee (amortized) | −117 |
| Vacancy (1 month/year) | −292 |
| Furnishing Depreciation | −167 |
| Stamp Duty on Tenancy | −15 |
| Net Monthly Cashflow | −822 |
Negative RM 822/month. That's RM 9,864/year the investor pays out of pocket — before even accounting for opportunity cost on the RM 80,000 down payment.
Scenario B: Islamic Financing at 4.00%
| Item | Monthly (RM) |
|---|---|
| Gross Rent | +3,500 |
| Financing (RM 720K at 4.00%, 35yr) | −2,920 |
| All other costs (same as above) | −1,172 |
| Net Monthly Cashflow | −592 |
Islamic financing saves roughly RM 230/month here, but this property is still cashflow-negative. The gross yield of 5.25% simply isn't enough to cover the full cost stack.
To break even on this cost structure, the rent would need to be approximately RM 4,100/month — a gross yield of 6.15%. This aligns with our general threshold: you need 5.5%+ gross yield to have a realistic shot at positive cashflow, and 6.0%+ for meaningful margin.
What Would Make This Property Work?
Three levers that shift the equation:
- Higher rent: RM 4,000–4,200/month (requires strong location fundamentals — transit, amenities, demand depth)
- Lower maintenance: RM 0.20/sqft instead of RM 0.30/sqft saves RM 100/month
- Better financing rate: Bank Islam at 3.95% vs a conventional loan at 4.40% saves ~RM 250/month
Combine all three and the same RM 800K condo becomes marginally cashflow-positive. This is why cost-stack analysis matters more than gross yield.
How Maintenance Fees Silently Kill Cashflow
Maintenance fees are the single largest non-financing cost for strata properties — and they vary enormously.
Typical ranges by property type:
| Property Type | RM/sqft/month | 1,000 sqft Monthly |
|---|---|---|
| Walk-up Flat | RM 0.10–0.18 | RM 100–180 |
| Low-rise Apartment | RM 0.18–0.28 | RM 180–280 |
| Mid-range Condo | RM 0.25–0.40 | RM 250–400 |
| High-rise / Serviced Residence | RM 0.35–0.55 | RM 350–550 |
| Luxury / Branded Residence | RM 0.50–0.80+ | RM 500–800+ |
The spread between a low-maintenance apartment (RM 0.20/sqft) and a serviced residence (RM 0.50/sqft) is RM 300/month on a 1,000 sqft unit. That RM 300 is pure cashflow destruction — it doesn't increase your rent proportionally.
Key patterns:
- Older developments (10–20 years) with established management corporations often have the most predictable and reasonable fees, though expect occasional special levies for major repairs.
- New launches frequently advertise subsidized maintenance fees for the first 1–2 years. Budget for the unsubsidized rate — it's typically 20–40% higher.
- Facilities-heavy developments (infinity pools, sky gardens, multiple gyms) carry higher fees that rarely translate to proportionally higher rent.
- Landed properties avoid maintenance fees entirely, but face their own cost structure: garden maintenance, roof repairs, perimeter security, and full property insurance.
For cashflow-focused investors, the sweet spot is RM 0.20–0.35/sqft. Below RM 0.20 and you may face deferred maintenance issues. Above RM 0.35 and the fee becomes a significant drag on net yield.
The Net Cashflow Formula
Here's the formula we use internally to evaluate every property:
Net Monthly Cashflow =
Monthly Rent
− Monthly Financing Payment
− Maintenance Fee
− Sinking Fund
− (Assessment Tax ÷ 12)
− (Quit Rent ÷ 12)
− Monthly Insurance
− (Estimated Annual Rental Tax ÷ 12)
− (Agent Fee ÷ Tenancy Duration in Months)
− (Monthly Rent ÷ 12) ← vacancy allowance
− (Furnishing Cost ÷ Lifespan in Months)
− (Stamp Duty on Tenancy ÷ Tenancy Duration in Months)
Opportunity cost is excluded from this formula because it varies by investor (some have no alternative use for the capital; others could earn 5%+ in ASB or REITs). But it should always be part of your decision-making framework.
Simplified version for quick screening:
Net Yield ≈ Gross Yield − Financing Rate − 1.5%
The 1.5% is a conservative estimate for all non-financing costs combined. If the result is negative, the property almost certainly loses money monthly. If it's between 0% and 0.5%, it's borderline. Above 0.5% net, you likely have genuine positive cashflow.
For Singapore Buyers
Malaysian property remains popular with Singaporean investors, but the cost stack has important differences for non-residents.
Currency: At the current SGD/MYR rate of approximately 3.4, an RM 800,000 property costs around SGD 235,000 — a fraction of Singapore entry prices. But currency risk works both ways.
Additional costs for non-residents:
- Non-resident rental income tax: Flat 30% on gross rental income (no deductions allowed), compared to the progressive rates (0–30%) available to Malaysian tax residents. This alone can flip a property from positive to deeply negative cashflow.
- Stamp duty on purchase: Non-citizens pay standard stamp duty rates, but certain states impose additional levies. Foreign buyers also face minimum purchase price thresholds (typically RM 1 million in most states, RM 2 million in Kuala Lumpur for certain property types).
- RPGT on disposal: Non-citizens face 30% Real Property Gains Tax for disposals within 5 years (compared to 30% scaling down to 0% for citizens).
The 30% flat tax on gross rental income is the critical variable. An RM 3,500/month rent generates RM 1,050/month in tax liability — no deductions for mortgage interest, maintenance, or depreciation. For Singaporean investors, gross yields below 7% rarely work on a net cashflow basis.
Structuring through a Malaysian Sdn Bhd (private limited company) can access resident tax rates, but introduces incorporation costs, compliance obligations, and director residency requirements. Consult a Malaysian tax advisor before committing.
Your 3-Minute Cashflow Check
Before you spend 20 hours analyzing a property, run this quick filter:
Step 1: Calculate Gross Yield
(Monthly Rent × 12) ÷ Purchase Price × 100
If below 5.5% → likely cashflow-negative. Proceed only if you have strong conviction on rental upside.
Step 2: Check the Maintenance Drag
Maintenance Fee ÷ Monthly Rent × 100
If above 15% → maintenance is consuming too much of your gross rent. Target below 10%.
Step 3: Estimate the Net Position
Gross Yield − Your Financing Rate − 1.5%
Positive → worth deeper analysis. Zero or negative → the property needs exceptional circumstances to work.
Step 4: Verify Rental Demand
Are there 3+ active rental comparables in the same development or immediate area? If not, your rental estimate may be unreliable. We cover this in detail in our cashflow-positive property indicators guide.
Step 5: Stress Test
What happens if:
- Rent drops 10%?
- OPR increases 50 basis points (financing rate up ~0.5%)?
- Vacancy extends to 2 months per year?
If the property survives all three scenarios without catastrophic losses, it's structurally sound. If any single shock puts you at −RM 1,000/month or worse, the margin of safety is too thin.
The difference between professional and amateur property investors in Malaysia isn't access to better deals — it's cost-stack discipline. The 12 line items above are the same for everyone. The edge is in knowing them, quantifying them, and making decisions based on net cashflow rather than gross yield headlines.