I’m a noob in property knowledge and would like to buy a property of my own for the only purpose to RENT OUT.

What are the factors should I look out to?
Unit nearby to college or LRT/MRT? Which is better?

If it’s a new project, how can I determine what’s the rental rate?

Am I eligible for first home buyer purchase if my parents already bought another house and listed my name inside?

My budget is 1M. What’s the best available property should I keep an eye on?

Hi, if you are looking for a property for investment (purpose to rent out), I am planning to sell mine (direct owner here). Have a ready tenant (family) and will give you a net positive cash flow every month. Tenant will be renting long term, at least 2-5 years or even longer if you wish to continue collecting rental.

Property details;
Selling Price: RM700,000
Size: 888 sqf (3 bedrooms, 2 bathrooms, 1 utility room)
Location: Petaling Jaya (walking distance to Tesco, 1.5km to LRT Ara Damansara, 2km to hospital & polis, 5.5km to bomba, near shop amenities)
Type: Service Residences
Floor: High
Tenure: Freehold
Car park: 2 (right next to the lift)
Age of property: Completed and key handover at end-2018
Facilities: Open Lawn with Amphitheater, Aqua gym, Swimming pool (kids & adult), Jacuzzi, Aqua Gym, Floating cabanas, Barbeque pavilion, Jogging track, Gymnasium, Children playground, MyNews at Ground Floor

Assuming your downpayment is 10% (RM70,000), loan value would be RM630,000. With interest rate of 3.2% and loan tenure of 35 years, your monthly financing installment would be about RM2,495.42.

A quick check from iproperty, current rental range is about RM1,600 to RM2,400. Assuming you manage to rent the unit at the highest price of RM2,400 through a property agent and after deducting 1 month of property agent fees (commission) per year, your monthly rental received would only be RM2,200 (RM2,400 x 11/12).

Also, under the Strata Management Act 2013 (SMA), homeowners are liable for the maintenance fees and sinking fund. For the unit above, the current maintenance fees and sinking fund is about RM341.88.

Hence, rental collection (RM2,200) minus monthly loan commitment (RM2,495.42) minus maintenance fees and sinking fund (RM341.88) equals to negative monthly cash flow of -RM637.30.

However, for the unit that I am letting go, you do not have to pay any property agent fees (commission) as you are dealing direct with the owner. The tenant is also willing to bear the monthly maintenance fees and sinking fund as well as the utilities bill (electricity, water, internet).

The monthly rental that you will be receiving is at RM2,650, translating to a rental yield of 4.54% (which is higher than the estimated rental yield indicated from iproperty at 3.5%). The amount is also higher than the estimated monthly financing amount, which will provide you a net positive cash flow of about RM154.58 per month (after deducting your monthly loan installment of RM2,495.42). This amount could even increase to RM225.44, if you manage to secure lower interest rate, at about 3.0%.

I’m not in a hurry to sell now, let me know if you are interested for more details after you have done your surveys. Other investors reading this post are also welcome.