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i would appreciate it if someone could direct me to property that can give 10% return. please advice....

i'm bit blurr with a client request.

Hi Lin Chiek Chong

A few ideas regarding your post of a client wanting 10% yield..don't we all!!...when this market finally hits bottom maybe that is what we will get...pe's of 6 to 10 and similar dividend yields of 6 to 10% on stocks...I know it seems crazy but at bottoms..real bottoms history tells us that is maybe what we should expect...till then we wait and wait and wait some more for all the government bailouts in the world to end and for the real correction in stocks and properties to continue on its course and reach a genuine reset in asset prices ..

A client wanting 10% return...!!!That is the very reason why this market will continue to go south price wise.People expect a return and this market doesn't give a return so why buy ..My area of interest is KLCC and IMO it gives 3 -4% max gross yield in 90% of cases if you use realistic rental rate.(If you use 2 year old rental figures from a long contract started a few years back then you will get a higher yield but when that contract finishes you will be looking at 3%( realistically) -4 gross yield or less in most cases(2% or less nett after maintenance and assessment/quit rent).A friend was getting 7.5k for a KLCC unit from an Embassy on a 4 year contract.The contract finished and after 5 months empty it just got rented again at 5k with new furniture! )Yes unfortunately rents continue to fall around KLCC and so yield based on todays prices keeps falling too.In fact the yield say 18 months ago when prices were say 1200 psf (and MUCH HIGHER rents)were far more compelling than the situation today.Today prices have dropped but so have rentals and from what I can see the yields 2 years go were far higher EVEN though condo prices were higher than they are today.So yes we all want higher yields to encourage us to buy but prices remain at a level that doesn't encourage any buyers.People buying today clearly need to think harder before parting with their cash IMO.If people think buying today is good value then they must be far smarter than I am because I fail to see any value in the market place and no driver for higher prices!So the wait continues...and continues and we wait for the bailouts to end .

So Chong When you find 10% yields..tell us all where!!

i definitely agree w you.....! LOL

Yes, 10% is a rediculous return to \"expect\" or ask for if that is a client of yours. I wouldn't necessarily be as gloomy as to say 90% of property returns only 3 to 4%. Such numbers are indeed prevalent but confined to the overpriced condos of KLCC golden triangle that reached for the stars a few years back, and where many investors thought indeed that all multinational expat managers had RM 20,000 housing allowances that they didn't care about. It is because of such disparity you find some KLCC properties with such miserly returns.

Normally however a smart buy can get you 6 to 8% gross, and slash 1.5% or so for service charges and other costs to get net. It is not uncommon today to pick up a RM750K Mont Kiara three-bedroom that can easily rent for 4K per month. with equipment being new and under warranty, and service charges being under 400 per month, you can net 40,000 per year. Armanee Terrace in Damansara Perdana has many corner units that are selling for 800,000 (forget intermediate units, the back bedrooms are too dark and gloomy), and these are renting at 5000 per month if furnished properly considering they are 4+1 bedroom duplexes at over 3000 sq. ft. with a view. 60,000 per year in net rental after service charges and petties is still decent above 6% net return, and that is without considering a high floor can fetch more. There are also semi-d's that are renting at 8000 per month when they cost less than 1.2 million in the first place, and with really almost non-existent service charge it nets over 7%.

Some properties are good buys for long term investment and won't make good rental return, some are good for rent but not great appreciation, you need to study the whole city and open up your options to desirable locations that are undervalued. Seems reasonable though that a property that returns 10% rent will not just be sitting there waiting for someone to want it.

btw, what the formula used to calculate the % of rental returns?

is it (Rental per months - Maintenance charges) X 12 / Property price X 100???

if a property priced at RM165400 can fetch rental of RM800 per month would it be a good buy?

the maintenance charge is less than RM150, inclusive of sinking fund......