What your Penang condominium actually earns after charges

A 1,200 square foot condominium at Tanjung Tokong, bought at RM900,000 and let at RM3,200 a month. The listing will tell you the gross yield is 4.3 per cent. Here is what actually reaches you.

Start with the gross

RM3,200 a month is RM38,400 a year. Nothing controversial yet.

The maintenance charge is the big one

At RM0.33 per square foot per month, a 1,200 square foot unit carries RM396 a month — RM4,752 a year. The sinking fund contribution is usually about ten per cent on top of that, so another RM475. In a seafront block with a large pool deck, RM0.40 psf is not unusual and that pair becomes RM6,336.

Whether the landlord or the tenant pays the maintenance charge is negotiable, but in the Penang market the landlord almost always does on a residential tenancy. Assume you are paying it.

Quit rent and assessment

Quit rent to the state and assessment to the local council. On a unit of this size, budget around RM480 and RM1,240 respectively — RM1,720 a year between them.

The letting fee

One month’s rent for a twelve-month tenancy, plus eight per cent service tax: RM3,456. On renewal it is three quarters of a month, so RM2,592 including tax. Spread across the two years that is meaningfully less than the headline suggests, but the first year carries the full month.

Vacancy

Even in a good block, plan on three to four weeks of vacancy a year across a holding period. At RM3,200 a month, three weeks is about RM2,215. Landlords who refuse to budget for vacancy are the ones who accept a bad tenant in month two.

Management, if you are not here

If you live overseas, a managing agent costs around six per cent of gross rent plus tax — about RM2,489 a year on this unit. Optional, and worth it if you cannot be at the property within a day.

The net

• Gross rent: RM38,400
• Maintenance and sinking fund: −RM5,227
• Quit rent and assessment: −RM1,720
• Letting fee including SST: −RM3,456
• Vacancy allowance, three weeks: −RM2,215
• Net, self-managed: about RM25,782, or RM2,148 a month
• Net yield on RM900,000: 2.9 per cent, against a gross of 4.3 per cent

Add management and the net falls to about 2.6 per cent. That is before income tax on the rental profit and before you spend anything on repainting or replacing an air-conditioner.

What this means when you buy

It is why we push income buyers towards Bayan Lepas, Relau and Gelugor rather than the prime seafront. The rent is lower, but so is the purchase price and, crucially, so is the maintenance charge per square foot. A RM560,000 unit at Bayan Lepas letting at RM1,900 with a RM0.26 charge nets closer to 3.6 per cent, and it lets faster.

Our net rent calculator will do this for your own unit, and it shows every deduction rather than a single number you have to trust.