The assumptions, inclusions and exclusions
This is one fictional scenario to explain the method, not evidence for any project. Rent is assumed at RM2,500, vacancy at one month and operating costs at RM6,000 per year. The mortgage uses the same reducing-balance formula as the existing calculator. Actual unrounded repayments determine the annual figure.
The operating allowance must be replaced with verified maintenance, sinking fund, insurance, assessment, repairs, letting and management costs as applicable. The example excludes acquisition costs, initial furnishing, income tax, sale costs and capital appreciation. Using total invested cost instead of purchase price would change the yield denominator.
Evidence to collect before believing the rent
Use comparable homes with the same size, furnishing, parking, condition and tenancy period. Record the date and distinguish an advertised asking rent from an achieved tenancy. Several agents advertising one unit do not establish several successful rentals.
Inspect competing completed buildings and the pipeline relevant to the intended tenant. Check whether a tenant can obtain similar space closer to work or rail for the same total cost. Keep vacancy and replacement costs in the stress test even when the building is new.
Break-even is not the same as a good investment
For this scenario, annual debt payments plus RM6,000 costs divided by 11 occupied months require roughly RM3,154 per occupied month to break even before the exclusions. That arithmetic is not evidence that a tenant will pay it.
If the investment only works with optimistic rent, no vacancy or a resale gain, identify that reliance before buying. Principal repayment builds equity but still requires cash each month; do not omit it from a cash-flow test or deduct it as an operating expense.
Short-term rental needs a separate permission and cost check
Do not treat a serviced-residence label, dual-key door or online hosting listing as permission. Obtain current written confirmation of the relevant local-authority requirements, approved use, management rules and any operator agreement for the exact development. This guide establishes no project's short-stay permission.
Model cleaning, platform charges, utilities, furnishing replacement, operator fees and seasonal vacancy separately. Nightly revenue multiplied by every day of the year is not a defensible net return. Keep a long-term-rental fallback only if its own evidence and rules support it.
