How To

Lagos Real Estate – How To Spot High Return Real Estate Deals In Lagos!

Let me first start off by saying that it takes great vision and foresight too be able to spot and identify high return real estate deals, but before we get into that, tell me.... If I had the ability to see the future and could tell you with 100% certainty and accuracy what will happen 10 years from now, what question will you ask me? What would you like to know? Lottery winning ticket...

In July, I sold a luxurious 4 bedroom terrace duplex at our development in Ikate, Lekki. 90% of my clients are investors. 90%. So before I actually list any property, I first of all do various research to check its investment potential and confirm if it is actually lucrative enough to bring to my clients. So in the course of checking the investment value of this 4 bedroom terrace duplex, I found out that rent per annum in that location for a 4 bedroom terrace duplex is ₦12 million. Next I checked the short let market and the daily rate for a 4 bed terrace duplex in that neighborhood is ₦250k/day. Basically what this means is that if you as an investor buys that house and uses it for short let business, in just 48 days you would get the total money you would make in a year if you had just rented it out. Mind you, there are 365 days in a year. 365 days minus 48 and you still have 317 days. So in 48 days you have made the money you would have made in a year renting it out and you’ll still have 317 days left. Of course there is no way you will be booked out for the entire 365 days in a year, it is impossible so let’s talk about the worst case scenario. There are 365 days in a year, the worst case scenario in that neighborhood is that you don’t get booked for 265 days. This means that you still have 100 days that you are booked. Let’s do some minor calculations. Please remember that the daily rate is 250k/day so 250k X 100 = ₦25 million. What my research showed in summary is that if you buy that house and rent it out, you would make ₦12 million per annum but if you buy it and use it for a short let, you would make ₦25 million per annum, worst case scenario. So by using your unit for a short let, you will make 100% more than you would if you rented it out. Now to be honest with you, that you made ₦25 million in a year does not mean that that ₦25 million is all profit. The thing about short let apartments or houses is that they incur running costs. Running costs like electricity bills, DSTV subscriptions, cleaning, marketing costs among others so to actually get the true figure you made, you will need to subtract those costs from the money you made. Nonetheless, after this is done you still have a lot of money left compared to renting out your house per annum. This bigger ROI on your cash flow investments is why short let properties has been gaining incredible momentum recently if you have been paying attention to the Nigerian real estate market. Investors like you have realised that by using their cash flow units for short let instead of renting it out per annum, they can make 100% to 200% more. Now apart from this bigger returns for investors, what other factors have been driving both the demand and supply for short let apartments and houses and most importantly why is a short let investment property a must have for you? The truth is that there are a lot of factors behind the demand for short let apartments and houses. A lot. One of the biggest factors contributing to the ever rising demand for short let apartments or houses has been Nigerians in Diaspora. Being that they have been living in well developed economies and countries, they have developed a sweet tooth for luxury, convenience and safety. They are also used to Airbnb, after which short let apartments and houses in Nigeria are modeled. So as a result of all these whenever they are in the country, booking an apartment where all they need and want is provided for them and available at their fingertips is a natural choice. They are one of the biggest drivers of demand for short let apartments and houses. They are also the group of people who are behind the annual end of the year boom in shortlet demand in developed cities as this is the period of the year that they fly into the country to see their families and attend various events. Most short let owners target this group but they are not the only people, not the only factor behind the rising demand for short let properties. Another big players in the Nigerian short let market are young Nigerians under the age of 30. What you might not know is that Nigeria has one of the youngest populations ever in the world. With a population of over 200 million people, 70% of which are all below the age of 30. Nigeria has over 140 million people under the age of 30. Another factor that you might not be aware of is that not only does Nigeria have the youngest population in the entire world, her current young population is the richest and most affluent young population it has ever had in its 64 years history. Thanks to the internet and the various opportunities that it offers, there are many young Nigerians under the age of 30 who are making in just a week what a very successful businessman in the 1990s would make in 10 years. This very affluent and still young population are another big factor contributing to the rising demand for short let properties. Eager to spend and show off their wealth, and of course desiring luxury, comfort and much needed security, they are always willing to spend top Naira to book luxury apartments for short term stays. The main subset of this young Nigerians under the age of 30 who are driving this demand for short let properties the most are content creators like skit makers, tik tokers, Facebook livers or whatever they call themselves amongst others who always need great background to shoot their contents and flex to their fans online. Remote working staff members of companies and contract staff members who mostly work from their home and report physically to the office every once in a week or thereabouts are another subset driving demand as there are some of them living in other parts of Nigeria but work for companies that are established in Lagos or Abuja. Being that they aren’t working full time, they have no need to fully relocate instead what they do is whenever it is time to report to the office they just book a short let apartment and stay there for the duration that their physical presence is needed. There is another subset of these young Nigerians under the age of 30 that is driving much demand for these short let properties and that is the so called Yahoo Yahoo boys. To avoid being tracked, harassed and arrested by the security agents, they used to forgo renting houses. Preferring instead to lodge in hotels but even the security agents have wizened up to that and have started bursting down the hotels they usually frequent and started arresting them there. So hotels are no longer safe for them, as a result they have pivoted to short let apartments and houses which are mostly located inside estates with very strict estate security which guarantees that there won’t be any police patrolling and monitoring what is happening inside the houses, not to mention come in to burst them there. They are another big players in the demand for short let properties. Another group behind this increasing demand for short lets are traveling company executives, event goers amongst others but they are small players as of now that am writing this. The main drivers of demand are Nigerians in Diaspora and young Nigerians under the age of 30 for the reasons I shared above. So why should you as a real estate investor in Nigeria have cash flow real estate properties? This is the first question I answered in the beginning of this article. With short lets you can make 2X what you would make renting out that your property. Short let gives you the opportunity to make more money on your cash flow real estate property. It maximizes your returns.. Of course for it to do that you need to to put things in place, every investment has its own rules and guidelines which you must follow to achieve success. The money in short lets properties lie in return bookings and longer stays. Feel free to jot what I just said down somewhere, that is how important and key it is. To make the most money from your short let property, you need to give your boarders such a good, efficient and unique service that next time they are looking for a short let to stay in the location where you have your property, you will be the natural and obvious choice for them. This is how you get return bookings. Getting return bookings will drastically cut down your marketing costs because you aren’t advertising to get these bookings. These are people who already reached out to you previously and loved your property and service so much, they become repeat customers. Return bookings are everything in short let business. Everything, because more often than not these people when they are returning bring their friends, families and partners who are introduced to your space and services. Return boarders also are your human indirect marketers. They are the people most likely to recommend your short let properties to a visiting acquaintance, friend or family member. Like I said previously, they are everything. The next thing that determines success for your short let properties are longer bookings. Someone initially books for 2 days but your services are so exceptional that they prolong their stay. Yes, it happens. The question is, how can you make it happen? The two factors I just mentioned and briefly discussed lower your marketing costs and vacancy rate. Now, how do you make the magic happen? How do you give your boarders such an exceptional service that many of them end up prolonging their stays while the others become return and referring boarders? It starts from the very beginning of you getting that house or that apartment, it starts with you asking yourself the category of boarders you want to position for the most and thinking what will you put in place that will appeal to that category of people the most? This is why I analysed the groups of people behind the demand for short let properties earlier. Are Nigerians abroad your target market? Then the apartment should focus on evoking the warmth and comfort of home. The design should blend modern living with traditional Nigerian touches, using rich wood finishes, cultural art, and decor that reflect Nigerian roots. The kitchen should be well-equipped for cooking Nigerian meals, offering essential utensils and gadgets familiar to those wanting to make authentic dishes for example pestle and mortar, ewedu broom et cetera. The apartment should be designed to cater to families in both designs and functionality, with spacious living areas, a family-oriented layout, and child-friendly features like cribs or play areas. The entire space should offer comfort and familiarity, with entertainment options such as Nollywood films and of course access to streaming services. Your marketing should highlight how the apartment creates a “home away from home” experience, ensuring comfort and nostalgia for Nigerians visiting or relocating to Nigeria. Best locations to position for these people are Lekki Phase 1 and Ikoyi as they offer a blend of comfort, luxury, and access to familiar conveniences. Lekki Phase 1 is popular among Nigerians returning home or visiting, with access to international schools, markets, and religious institutions. It offers a secure, luxurious environment with modern estates that provide a sense of belonging while staying connected to the bustling city life. Ikoyi, with its exclusive neighborhoods and serene atmosphere, offers high-end living and excellent security, making it perfect for Nigerians in the diaspora seeking peace, luxury, and familiarity. For those looking for a quieter, more affordable but still premium experience, Ikeja GRA and Ajah, Sangotedo, and Abraham Adesanya are excellent choices. What if your target audience are young Nigerians, with a focus on content creators? Then the apartment needs to be vibrant, trendy, and tech-friendly. The design should be a trendy, Instagrammable decor featuring bold colors, photo-ready walls, and fun furniture that creates visually appealing backgrounds for videos. Lighting is essential, so adjustable LED strip lights and ring lights will help set the mood for content creation. The space should also be flexible, with open floor plans and easily movable furniture to create much space and accommodate different filming needs. The tech setup should include fast Wi-Fi, charging stations, and tools like tripods and selfie sticks, making it a perfect environment for vlogging, skits, or TikTok videos. The ambiance should be lively and creative, with themed areas and social spaces for collaboration. Your marketing should focus on the apartment being a content creator’s dream — ready for filming and social media posts, with easy access to vibrant urban areas for inspiration. Best locations your property should be in that is perfect for this group is Lekki, VGC, some parts of Sangotedo, Ikeja GRA, Yaba and Surulere which is already popular among content creators due to its access to Nollywood studios and a central location that offers both residential and commercial vibes. If your primary target are business executives, then the apartment should be designed to offer both luxury and productivity. The decor should be sleek and modern, with premium furnishings in neutral tones like gray and black. Essential features should include a dedicated ergonomic workspace with high-speed internet, a small meeting area for informal gatherings, and smart home technology such as wireless chargers, smart TVs, and Bluetooth speakers. Additionally, the apartment should provide a fitness area or access to a nearby gym for wellness, as well as concierge services for convenience. The ambiance should be quiet and private, offering executives a restful environment with blackout curtains for optimal sleep. Luxury amenities, such as high-end linens, premium toiletries, and a Nespresso machine, will elevate their experience. The marketing will emphasize proximity to business districts, the convenience of an executive-focused workspace, and the high-end, peaceful atmosphere. Best location for you to position for them is Victoria Island, which is Lagos’ central business district with corporate offices, high-end hotels, and restaurants. Making it ideal for executives. Also Ikoyi, Known for its upscale residential areas, privacy, and close proximity to the financial hubs of Victoria Island and Lekki is perfect for executives who want a luxurious, quiet environment. Other great locations include Lekki Phase 1 and Ikeja GRA. Now when you have gotten all these things right, the furnishings, designs, features and locations. There still remains one thing else you must, must get right. This is the most important part so read carefully. When you are in the short let business, you are in the hospitality business. The people checking into your apartments aren’t just boarders, they are guests and should be treated as one. So you should add a personalized human touch to your services. Try to learn who your guests are and prepare a personalized welcoming basket, for example for a young family with a young child, adding a playtoy to the gift basket for their kid will go a long way. For a Nigerian based abroad, a warm note, possibly with a cultural proverb or greeting, will go a long way. Be creative. Have someone who will show them in and take them on a brief tour of the house, explaining how things work in the apartment and anything they might need to know to enjoy their stay, even little things like what time to come out on the balcony to catch the best view of a sunset or sunrise. Yes, I am detailed. Little things like that make the most difference. There should also be someone they can call if they need anything or encounter any challenge whatsoever. If you can get all these things right then it simply means that you will always have return bookings, word of mouth referrals and marketing and even people prolonging their stays. If the average occupancy rate in that location is 100 days out of 365 days, expect your own occupancy rate to be over 150 days out of 365, most importantly as long as you maintain your standards, expect this to always increase every year due to the law of compounding. Your old guests are coming back and referring new people, these new people are also coming back and referring newer people. This my people is how you run short let/Airbnb successfully in Nigeria. Now I know what is going through your mind, ‘Ugochukwu where will I have the time to do all these? Am busy, I got my main business and company to run’. I totally understand, and the good news is that you don’t have to. There are companies who run short let apartments and houses full time on behalf of the owners. They handle marketing, cleaning and the whole operations for a commission of course. Most take 30% commission of revenues generated, while 70% goes to you. This is good as they only make money when you do. To focus on other things you are doing, you can work with them. This is all you need to know about running a successful short let business in Nigeria. In case you have been wanting to get an apartment and start a short let business in the Lekki area of Lagos but any apartment you make inquiry on, they tell you ₦150 million, ₦200 million with outright payment, what if I give you the opportunity to own a super luxurious 2 bedroom apartment that sells for ₦110 million with just ₦15 million initial deposit and spread the remaining balance for up to 12 months? Will you take it? This is our pre-introductory offer on our latest project, Two3Four Residence. A 7 storey, 42 apartment masterpiece, located in Lekki, Lagos. Just off Freedom Way. It will be delivered in 2026

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