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Renting A Johor Factory: 4 Important Factors That Affect Rental Rate

Posted by Joanna Tee on July 5, 2022
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One of the things you need to consider when renting a Johor factory is the rental rate. You wouldn’t want to rent a factory above the market rate. Besides considering if the rental is above the market rate, there are other factors you will want to consider, such as is the rental within your budget? Is it overpriced? Is it a deal that you want to make? These are the common factors that people would think of when it comes to renting a Johor factory.

As a businessman, you will want to find a reasonable rental rate for your factory. You will want to make the correct decision to maintain your cost within your budget. Sometimes it can be tricky to find the perfect rental rate your want, especially if you are a first-timer.

There are many factors that factory owners determine the rental rate for the factory. You will want to know the factors that will affect the rental rate when renting a Johor factory. Read on, and you will learn more about Malaysia’s rental rate calculation.

Renting A Johor Factory #1 – Location

factory johor
Image Credit: Canva

Finding a location that suits your business is important but also a factor in determining the rental rate for your chosen factory. The location of your factory plays a major role in a rental property. It can directly have an impact on your business. Lord Harold Samuel uttered one of the most famous quotes: “There are three things that matter in property: location, location, location.

Factory areas are typically located away from residential places, so there won’t be many amenities around factory areas. The closer the factory is to the business spots, workplaces and amenities, the higher the price will be. How easily the factory can be accessed also plays a major factor in the rental rate.

Renting A Johor Factory #2 – Size Of The Factory

factory johor
Image Credit: Canva

Depending on the need of your business, you will need to consider the size of the factory when renting a Johor factory. One of the factors that will affect a factory’s rental rate is the location’s size. A bigger factory area will cost you more.

So when choosing the size of the factory, consider if you need a smaller factory or a bigger factory. There is some factory which is stand-alone while there are others that are attached to another factory. The rental may also differ.

Renting A Johor Factory #3 – Fully Furnish or Not Furnish

factory johor
Image Credit: Canva

Before renting a Johor factory, you will want to know if the factory is furnished or not. Most of the time, factories won’t be fully equipped as the different businesses have different needs and will need different types of machinery for production.

Unless specific factories close down and intend to rent the factory with the machinery, most of it will be bare. But you can check certain areas, such as the office and toilets if they have done any furnishing. You may save some trouble on renovating the office.

Renting A Johor Factory #4 – Parking Space

factory johor
aImage Credit: Canv

Parking space is quite a problem for working areas, especially for factories, as they are located further from residential and business areas. Factories will have limited parking space, especially if you have more workers who drive to work. The rental will be less because the parking space is a common area.

But if you have noticed, parking space is included in certain industrial areas, especially newer ones with a stand-alone factory. This may be good for certain businesses as they may need a lot of loading and loading of goods, but since the parking space is included and the space is bigger, the rental may be more expensive.

How Is Rental Calculated When Renting A Johor Factory

factory johor
Image Credit: Canva

The rental calculation is calculated based on the concept of property rental yield. The final amount of the rental can be calculated using the help of the rental yield calculator. You will need to understand that there may be some extra costs that will be added to the rent.

These additional costs can play a huge role in your rental when you are renting a Johor factory. It can be used to calculate rental for residential property. These additional costs can include maintenance and repair costs, property management fees, if there is any, insurance, agent cost, and tax reporting.

Renting A Johor Factory: Understand What Rental Yield Is

factory johor
Image Credit: Canva

As the rental is calculated based on rental yield, you will want to understand what rental yield is. Rental yield measures the gap between the overall costs and the income received from the rent annually. Rental yield is similar to the return of investment ratio computation.

When you understand how rental yield works, you will understand more about how the rental is calculated. Sometimes, it will be helpful when your landlord wants to review your rent. This can help the landlord review if your rent can pay off the maintenance cost to keep the property running.

Renting A Johor Factory: What Is A Good Rental Yield

factory johor
Image Credit: Canva

Everyone will want to earn a high rental yield. The rental yield will differ depending on the property type, area, and location. In Malaysia, the average rental yield is around 4-5%.

There are two methods to calculate the rental yield:

  • Gross rental yield

The percentage return of rental income from the factory. This method will exclude the expenses incurred from the maintenance against the property’s total purchase price. The formula for gross rental yield is (Total rental income per annum/purchase price of the property, inclusive of all related costs) X 100.

  • Net rental yield

The property financing will be included to calculate the rental yield using the net rental yield method. This method will consider many variables. This method can be tricky but is the most accurate way to calculate the rental. The net rental yield formula is (Total rental income per annum – total maintenance cost/purchase price of the property, inclusive of all related costs) X 100.

You can check out the rental range within your desired factory location. You will be able to know if the rental is reasonable. Renting a Johor factory may not be easy, but this guide gives you a rough idea of what to take note of.

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