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Rental ROI · The 6% Rule

Does it pay
for itself?

The one number every property investor should check. At about 6% ROI, the rent covers everything — installment, maintenance, quit rent, assessment, insurance. Below it, you top up monthly.

← All 8 numbers to check before you buy

Your rental

ROI = annual rent ÷ price.

The numbers
RM
RM
Holding costs
Target
Most KL/Selangor long-term condo rentals only hit 3–4%. The 6% rule is the "pays for itself" benchmark.
Your gross ROI
0%
Enter price and rent to begin
target 6%
0%5%10%
Monthly rentRM 0
Annual incomeRM 0
÷ property priceRM 0
Gross ROI0%
Rent needed to hit your target will show here.

Net yield is not cash flow

The yield ignores your loan. Add the installment and see what actually happens to your pocket every month — a RM3,500 rent can still lose you RM700 a month.

Your loan

Cash flow = rent − holding costs − installment.

RM
Uses the rent and holding costs you entered above — fill in holding costs (maintenance, quit rent, insurance) for an honest number.
Your monthly cash flow
RM 0
Enter your loan amount to see cash flow
Monthly rentRM 0
Less holding costs− RM 0
Less loan installment− RM 0
Monthly cash flowRM 0
Over a yearRM 0
Positive = the tenant is buying the house for you. Negative = you top up every single month.

Why 6% means it pays for itself

A RM500k condo on a 90% loan (RM450k @ 4%, 35 yrs). The income you'd need to cover everything:

RM1,990

Loan installment

The bank repayment (estimate).

RM360

Maintenance + sinking

~RM0.40/sqft/month.

RM110

Quit rent + assessment

Local-authority charges.

RM30

Fire insurance

Standard with the loan.

Total ≈ RM2,490/month = ~RM30,000/year = ~6% of RM500k. Hit 6% and the rent covers it all. The reality? Most KL/Selangor condos manage 3–4% — so owners top up monthly, betting on price growth.

Questions

How is rental ROI calculated?
ROI = (annual rental income ÷ property price) × 100%. Gross uses rent only; net subtracts your holding costs first for a truer picture. Example: RM30,000/year on a RM500k condo = 6%.
Why is 6% the benchmark?
On a typical 90%-financed KL condo, all-in monthly costs (installment + maintenance + quit rent + insurance) come to roughly 6% of the price as annual rent. Hit 6% and the property pays for itself; below it, you subsidise it each month.
Gross vs net yield — which matters?
Net is the honest number — it's what's left after maintenance, quit rent, insurance, vacancy and repairs. Gross looks better but ignores real costs. Both are shown so you can compare listings fairly.
Most rentals are only 3–4% — is that bad?
Not necessarily. Many investors accept a lower yield and top up monthly, betting on capital appreciation. Just go in knowing the property doesn't pay for itself yet — don't assume the rent covers the loan.
What is negative cash flow?
When the rent, after holding costs, doesn't cover the loan installment — so the property takes money out of your pocket every month even while it's rented out. Example: RM3,500 rent − RM900 costs = RM2,600 net, but the installment on a RM720k loan is ~RM3,300 → you top up ~RM700 monthly. Whether that's acceptable depends on your buffer and the appreciation you realistically expect.

A rule of thumb for general education — not financial or investment advice. Figures are illustrative; rate, tenure, financing margin, fees and rent vary. "Most 3–4%" reflects general KL/Selangor market observation. Short-stay (Airbnb) can yield more but with more work, vacancy and building/local rules — always do your own due diligence.