Property in Malaysia for sale and rent | Buy, Rent and sell real estate and homes

Can anybody challenge this theory (with real life examples):

It is near impossible to get ROI of 10% and above in the current economy.

Looking forward to this

Annual rent being at 10% of a property's price is not entirely impossible, in ANY economy including this one. It is getting reliable annual rent of that level in a PROPER piece of real estate that is near impossible.

Like James up there demonstrated, if one is looking purely at 10% rental yield, there it is. But as the building shows it is a joke and a waste of money to buy something like that. Dilapidated leasehold building that is probably a couple of decades from expiry and maybe 5 more years before becoming unlivable. Its maintenance costs are high and can easily be in violation of multiple health and safety codes. So obviously cannot be regarded as a proper real estate investment when nobody knows how long that building is allowed to remain like that without serious work, or even allowed to remain, period. Maybe if it is developed and rebuilt extensively it will be ok, but then it isn't costing 86000 anymore, is it?

However great rental returns can be achieved with creativity. Tired houses in great locations and apartments bought from desperate sellers in PROPER buildings and condominiums, then renovated on the quick and then furnished to excellence can end up being an excellent investment in and by itself, but also produce rental returns that are indeed 10% or more of the cost of the property plus work.

Now the tricky question: Is it REALLY 10% considering the property's value have improved so much due to the work and therefore is valued differently now?

Point is that a standalone property with its location, condition, amenities and options if it's not under imminent legal threat or in great disrepair, why WOULD it not be more expensive when it's producing such return? I remember a property guru (Jerome Tan from Singapore) was talking about his 10 second rule: Calculate the average rent yield and if the price is 150 times the monthly rent (annual rent yield 8%), then buy. Combining that with the rule that should apply to only the top 1% of the market (Examine 100 properties, make 10 below market offers, buy one.) you should then automatically understand that 99% of the ready-to-rent market is below 8% rental yield.

So are there REALLY 10% yield properties? I know of one: A shop near china town that is renting at 11% of its price. I understand that because it is a retail business in a busy market, tax wise it is better to have several shops full of goods with rent slashing your profits down in the accounting books, than a fully owned shop locking the business's cash. I suggest if someone is so specific as to 10% rental yield without taking a tired unit and developing it on the cheap, then Mall stalls and downtown market shops is a place to look.

Those are really precious points. Thank you so much for sharing Samer!!!!
Greatly appreciate it!!!

would we get 10% if invest in commercial property?

no commercial rental same as residential in terms of yield

I believe you’ll have a good chance to get 10% yield if you buy from developer (under-construction). Of course, it depends on other factors as well.

If it’s completed/in subsale market, it is fairly difficult to get 10% yield. Normally, you’ll have a better chance with smaller units i.e. studios.
Mostly, sellers will mark-up the price to make the current rental just enough to cover installment. For subsale cases, you can buy now and forecast that rental will increase over time due to huge future office/commercial projects around the area. Urban redevelopment may make an area of low rental to become high in the future. Examples of planned future redevelopment in the news are Kg Baru, Datum Jelatek, Stadium Merdeka area, Jalan Cochrane area & Tamansari.

Examples:
Melur apartment near Sentul LRT. Developer’s price is only about RM120k, but now you can get rental of min RM1000 p/m. Now, market price is about RM220k.

Putra Villa condo (near Gombak LRT) was sold at min RM170k. now can command rental of RM1500 p/m.

Casa Mutiara’s studio is only about RM100k+ when opened to public. In 2007, subsale was around RM160k. Now can get rental min RM1500 p/m.

For Maytower, it’s even lucrative. Capsquare is not even fully opened yet. Same with Amcorp studios.

Similarities from these examples are NEAR TO LRT STATIONS + HIGH-RISE BUILDINGS.