Most property investors glance at the asking rent, divide by the asking price, and call it yield. That single number hides maintenance costs, vacancy periods, financing charges, and exit taxes. This guide walks through the four metrics that together paint the full picture — and shows exactly how each one plays out on a single RM350,000 Kuala Lumpur condominium.
30-second screen. Raw income vs price, before any costs.
≥ 5% is goodRealistic baseline. After maintenance, vacancy, and fees.
≥ 3% is goodMonthly cash flow test. After loan repayments.
≥ 0% = self-fundingCapital gains tax on disposal. 0% after 6 years for citizens.
Hold 6+ yearsMetric 1: Gross Rental Yield
Gross yield is the universal starting point. It tells you how much annual rent you collect relative to the purchase price — before factoring in a single ringgit of costs.
Example: (RM1,800 × 12) ÷ RM350,000 × 100 = 6.17%
| Threshold | Signal | Context |
|---|---|---|
| ≥ 7% | Exceptional | Rare in KL — typically PPR/affordable housing |
| 5 – 7% | Good | Above KL avg (4.60%), above national avg (5.19%) |
| 4 – 5% | Acceptable | Near market average; check net yield carefully |
| < 4% | Borderline | Needs strong capital appreciation thesis |
Limitation
Gross yield ignores maintenance fees, vacancy, legal costs, and financing. A property at 6% gross can easily deliver only 2–3% net after real-world costs. Always calculate net yield before deciding.
Metric 2: Net Rental Yield
Net yield deducts all recurring ownership costs from your rental income. It is a far more honest picture of what you actually keep each year.
Malaysian operating costs — what to include
| Cost item | Typical rate | Example (RM350k, 900 sqft) |
|---|---|---|
| Maintenance fee (strata) | RM0.30–0.45/sqft/month | RM 3,780/yr |
| Assessment tax (cukai penilaian) | RM400–800/yr | RM 600/yr |
| Insurance (fire/content) | RM300–500/yr | RM 400/yr |
| Vacancy allowance | 5–10% of annual rent | RM 1,728/yr |
| Letting/agent fee | 0.5–1 month/yr | RM 900/yr |
| Stamp duty on purchase (amortised ÷10 yrs) | Tiered — see box below | RM 600/yr |
| Total annual operating costs | RM 8,008/yr | |
Net yield = RM 13,592 ÷ RM 350,000 × 100 = 3.88%
Our 6.17% gross yield drops to 3.88% net — still above the 3% threshold, but a meaningful 35% reduction from the headline figure.
Malaysia Stamp Duty — Purchase Costs to Know
- Stamp duty on instrument of transfer (IoT): 1% on first RM100k · 2% on RM100k–RM500k · 3% on RM500k–RM1M · 4% above RM1M
- First-time buyer exemption: 100% exemption on IoT stamp duty for properties ≤RM500,000 (SPA signed by Dec 2025)
- Stamp duty on loan agreement: 0.5% of loan amount
- Legal/conveyancing fees: ~1% of property price (regulated scale)
One-time costs like stamp duty and legal fees should be amortised over your expected holding period (typically 10 years) and included in the net yield calculation.
Metric 3: Cash-on-Cash Return
Net yield assumes you paid cash. Most Malaysian investors finance with a home loan — which means the bank is supplying 90% of the purchase price and charging you for it. Cash-on-cash return answers the question your bank statement asks: am I paying in or taking out every month?
Total Cash Invested = Down payment + Stamp duty + Legal fees
Worked example — RM315,000 loan at 4.5% over 25 years
| Item | Amount |
|---|---|
| Monthly mortgage (EMI) | RM 1,750/mo |
| Annual mortgage payment | RM 21,000/yr |
| Down payment (10%) | RM 35,000 |
| Stamp duty on transfer | RM 6,000 |
| Stamp duty on loan (0.5%) | RM 1,575 |
| Legal fees (~1%) | RM 3,500 |
| Total cash invested | RM 46,075 |
Cash-on-cash = −RM 7,408 ÷ RM 46,075 × 100 = -16.1%
Monthly top-up out of pocket: RM 617/mo
Is negative cash-on-cash a red flag?
Not automatically. Negative cash flow is extremely common among Malaysian residential investors at current lending rates (~4–5%). You are effectively paying RM617/month to own an asset that is also building equity through principal repayment and (historically) appreciating at 3–5% per year in KL. The question is whether you have the holding power — and whether the appreciation thesis is sound for that specific area.
For self-funding cash flow (cash-on-cash ≥ 0%) at ~4.5% financing, a property typically needs a gross yield above 7–8% — which is rare outside affordable or PPR-grade housing.
Capital Gains & RPGT — The Exit Multiplier
Yield metrics measure annual income. But property is also a capital asset — and how much you keep when you sell is determined by Real Property Gains Tax (RPGT), Malaysia's tax on property disposal gains.
| Year of disposal | Malaysian citizen | Foreigner |
|---|---|---|
| Year 1 | 30% | 30% |
| Year 2 | 20% | 30% |
| Year 3 | 15% | 30% |
| Year 4 | 10% | 30% |
| Year 5 | 5% | 30% |
| Year 6 onwards | 0% ✅ | 10% |
RPGT is charged on the gain only, not the sale price. Allowable deductions: purchase price, legal fees, stamp duty, agent commission, and capital renovation costs (with receipts). Individual exemption: greater of RM10,000 or 10% of the gain.
Capital gain = RM470,365 − RM350,000 = RM120,365
RPGT (Malaysian citizen, year 10): 0% → keep the full gain
Key rule: Malaysian citizens who hold for at least 6 years pay zero RPGT on disposal. Planning your hold period around this threshold is one of the highest-leverage decisions in Malaysian property investment.
Full Picture — RM350,000 Condo at a Glance
| Metric | Result | Verdict |
|---|---|---|
| Gross rental yield | 6.17% | ✅ Good (≥5%) |
| Net rental yield | 3.88% | ✅ Good (≥3%) |
| Cash-on-cash return | -16.1% | ⚠️ Top up RM 617/mo |
| RPGT at exit (year 10) | 0% | ✅ Hold 6+ years |
Quick Reference: When to Proceed
| Metric | ✅ Good | 🟡 Acceptable | ❌ Caution |
|---|---|---|---|
| Gross yield | ≥ 5% | 3 – 5% | < 3% |
| Net yield | ≥ 3% | 1.5 – 3% | < 1.5% |
| Cash-on-cash | ≥ 0% | −10% to 0% | < −10% (without strong cap. apprec.) |
| Hold period | 6+ years (0% RPGT) | 3 – 5 years | < 3 years |
Use All Four — Not Just One
Gross yield is the fastest filter but the most misleading in isolation. Net yield gives you the realistic income baseline after running a property. Cash-on-cash tells you whether you need to top up monthly — and by how much. And RPGT shapes your exit strategy before you even sign the SPA.
The RM350,000 condo in this example looks attractive on gross yield (6.17%), holds up on net yield (3.88%), requires a RM617/month top-up under financing (negative cash-on-cash), but exits completely tax-free after year 6. Whether that trade-off works depends on your personal cash flow capacity and conviction in the area's appreciation potential — both of which no formula can substitute for.
See Net Yield by KL Neighbourhood
MoveMatch computes net yield for every area in Kuala Lumpur from real government transaction records and live rental listings — no guesswork.
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