If you want to set up a new company or expand your business in Johor, renting a Johor factory is a vital step for your business. We have always wanted to provide essential insight into renting or buying the Johor factory to all entrepreneurs who intend to expand their operations in Malaysia.
When you have decided to rent a Johor factory, many expenses are associated with it. You will want to consider the expenses related to the factory to help you select the best Johor factory for your business. You need to consider many factors besides the rent, such as the other costs related to the factory, whether there will be any additional charges, etc.
We will be listing 6 main expenses related to a Johor factory. Some of you may be considering if you want to buy or rent a Johor factory, here are some benefits of renting a factory that you will want to consider. One benefit is that renting can reduce your investment cost since the construction cost and land acquisition expenses will be much higher than the rental. Renting a factory can help alleviate your capital structure, and you can focus more on your operation and productivity.
Another benefit is that you can relocate or expand your operation easier and swiftly. Depending on the situation, you can set up or close down your factory.
You are definitely anxious about wanting to know more about the expenses that are associated with renting a factory. We will discuss more in the article.
Johor Factory Expenses #1 – Rent
Since you are renting the factory, the rental is the main cost of it. The landlord of the Johor factory will quote the rental by the number of square feet. The total cost depends on the size and condition of the factory. You will need to note that the rent does not include service charges, utilities, and other various service agreements.
You would need to evaluate the rental amount when selecting the factory that suits your need since it is the essential cost of renting a factory. It would be best if you did your homework before deciding. Check out the average rental price for the factory in the area that you want to rent. Rental amounts usually vary depending on the location, building age, and utility availability.
Johor Factory Expenses #2 – Deposit
When you are renting a factory, besides the rental, landlords will also require the deposit in terms of the monthly rent. The deposit can be from two to four months of the monthly rent, depending on the agreement between the landlord and the lessee. The deposit will be returned to the lessee at the end of the contract term.
The deposit amount depends on the negotiation between the landlord and lessee. So when you have found your desired factory to rent, try to negotiate the deposit amount to be in an agreeable term and satisfied by both parties.
Johor Factory Expenses #3 – Water and Electricity
Usually, the utility charges will be bear by the lessee. They will have to pay for their own according to the water and electricity units they use every month. There will be a difference between residential and business use for water and electricity charges.
It is important to add the utility rates into your evaluation when assessing the factory you want to rent. Doing an analysis of your utility consumption can help you find the factory that fits your need.
Johor Factory Expenses #4 – Maintenance Fees
After the end of the contract and you want to move out, you are generally requested to return the property to its original state. Depending on the property situation, the landlord may deduct any fees for severe property damage from your deposit. This will normally be stated in the contract or discussed before signing the tenancy agreement.
The repair cost is another related expense of renting a Johor factory. Depending on the negotiation between the landlord and lessee, it will be stated in the tenancy agreement. A small repair cost or under a certain amount will be responsible by the lessee, or else it will be accountable to the landlord. You will want to go through the terms and conditions of the tenancy agreement before signing it.
Johor Factory Expenses #5 – Advance Rental
Advance rental, also known as an earnest deposit, is paid before the signing of the tenancy agreement. Depending on the tenancy agreement, the usual practice will be for one month’s advance rental to be paid and placed with the owner’s appointed agency account.
This advance rental is considered a form of the booking fee to secure the property. The lessee doesn’t need to pay the first month’s rental after signing the tenancy agreement. It will be considered as your first month’s rental.
Johor Factory Expenses #6 – Other Expenses
Other expenses you may need to be responsible for include water treatment, security guard, machinery, and insurance. Many other expenses depend on your requirement for your rental of the factory.
The landlord usually pays for the property insurance, but some will require the lessee to pay for it depending on the agreement.
Here are the core expenses that is related to renting a Johor factory. Of course there are many other expenses that is related to your business. You will want to take all these expenses in consideration when you are looking for a suitable factory for your business. Some of the expenses can vary depending the negotiation between your landlord and you. Ensure that you go through the tenancy agreement property before you signed it.
I hope you all find this article helpful. Els Factory provides a one-stop solution for Johor factory and land seekers, including built-to-suit warehouse solutions, and offers a comprehensive list of for-sale and rental factories and land.
Els factory has served over 300+ Businesses, with 30 years of experience in Industrial Real Estate Consultancy. With our industrial knowledge and years of experiences in selling or renting factories in Johor, our professional team are providing professional advises and solutions for you.
To Buy & Rent Johor Factory, Warehouse & Land, especially for MNCs looking to set up businesses in Johor, click here to contact us!