Rental Yield Calculator
Calculate rental yield with country-specific rental rules and taxes.
Enter property details and click Calculate.
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Calculate rental yield with country-specific rental rules and taxes.
Enter property details and click Calculate.
Explore our full suite of free online calculators.
A gross yield of 5%+ is considered good for residential property in Malaysia; 4-5% is average; below 4% is low. However, net yield matters more — aim for 3%+ net after all expenses. Compare these yields with EPF (5-6% risk-free). If your net rental yield is below EPF returns, you are effectively betting that property appreciation will compensate for the lower yield.
Use the property's current market value (not your purchase price) as the denominator. If your property is now worth RM 600,000 (bought at RM 400,000) and generates RM 24,000/year, the yield based on current value is 4%, not 6%. This is your 'opportunity cost' yield — if you sold and invested at 5%, you would earn RM 30,000/year, making the rental investment suboptimal.
Allowable deductions include: mortgage interest (not principal), quit rent, assessment tax, fire insurance, maintenance and repairs, property management fees, agent fees for finding tenants, and legal fees related to tenancy. Capital improvements that increase property value are not deductible but can be added to the property's cost base for future RPGT calculations.
High-yield properties (6%+ gross) generate strong cash flow but are typically in less prime locations with lower capital appreciation potential. Low-yield properties (2-4% gross) are usually in prime locations with higher expected price appreciation. Your strategy determines the choice: income investors prefer high yield; growth investors accept low yield in exchange for capital gains.
Leverage amplifies both returns and risks. With a 10% down payment, a 5% yield on a RM 500,000 property is RM 25,000 on a RM 50,000 investment — that is 50% Cash-on-Cash Return. However, the mortgage must be paid from rental income, and if the rental market softens, you still owe the bank. Cash-on-Cash Return = (Annual Net Rental - Annual Mortgage) ÷ Total Cash Invested × 100.
The 1% rule states that monthly rent should equal at least 1% of the property's purchase price. A RM 300,000 property should rent for at least RM 3,000/month. This rule of thumb is RARELY achievable in the Klang Valley at current prices where a RM 500,000 condo might only rent for RM 2,000-2,500 (0.4-0.5%). A more realistic target for Malaysia is 0.5-0.7%.
Furnish the property (fully furnished units rent for 20-30% more), target expatriate or student tenants who pay premiums, offer flexible lease terms, renovate kitchens/bathrooms, include utilities in the rent, manage the property yourself instead of using an agent (saving 8-10%), and buy below market value to improve effective yield.
Cap rate equals net rental yield — Net Operating Income ÷ Property Value. It measures the unlevered return before financing costs. Cash-on-Cash Return includes leverage. Investors use cap rate to compare properties and cash-on-cash to evaluate their specific leveraged return. A cap rate below the mortgage interest rate means negative leverage (borrowing hurts returns).
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Before buying an investment property, you need to know one number: the rental yield. This tells you what percentage return your rental income generates relative to the property's value. A high yield means strong cash flow; a low yield means you are betting on capital appreciation.
Our free rental yield calculator computes both gross and net rental yield, accounting for all the hidden costs that eat into your rental income. Enter the property price, monthly rent, and expenses to see your true return on investment.
Gross yield is a quick estimate, but net yield reveals the true return. Annual expenses include maintenance, property management fees, quit rent, assessment tax, fire insurance, and a vacancy allowance. In Malaysia, a gross yield of 4-5% is typical for residential property in the Klang Valley, while net yield is often 2-3.5% after all expenses. Always calculate BOTH to avoid overestimating returns.
Formula: Gross Yield = (Annual Rent ÷ Property Price) × 100; Net Yield = (Annual Rent - Annual Expenses) ÷ Property Price × 100
You buy a condominium for RM 500,000 and rent it for RM 2,000/month (RM 24,000/year). Gross yield = 4.8%. Annual expenses total RM 9,400. Net income = RM 14,600. Net yield = 2.92%. If you also have a mortgage at RM 1,800/month, your monthly cash flow is RM 2,000 - RM 1,800 - RM 783 (expenses) = negative RM 583 per month — the property is cash flow negative despite having a 4.8% gross yield.
In Malaysia, typical gross rental yields: Klang Valley condominiums 3.5-5%, landed properties 2.5-4%, commercial shop lots 5-8%, student housing 6-8%. Yields tend to be higher in secondary cities compared to prime KL areas. Property management fees typically cost 8-10% of monthly rent. Tenancy agreements must be stamped to be legally enforceable.