Why Buy-to-Let Works in Lagos

Lagos has a housing deficit exceeding 3 million units — and the city's population grows by roughly 600,000 people per year. Demand for rental accommodation consistently outstrips supply across all market tiers, from budget apartments in Surulere to luxury flats in Ikoyi. This structural undersupply is the fundamental engine of Lagos buy-to-let returns.

Rental yields in established corridors typically range from 8–12% gross. In high-demand short-let areas like Lekki Phase 1, well-managed serviced apartments can achieve 12–18% gross yields depending on occupancy rates. Compare this to UK long-term buy-to-let averaging 3–5% gross, and the Lagos case becomes compelling for any yield-focused investor.

Choosing the Right Location for Buy-to-Let

Not all Lagos locations deliver equal rental performance. Prioritise these three criteria when evaluating a buy-to-let location:

• Employment catchment: Properties within 20 minutes of major commercial hubs — Lagos Island, Victoria Island, Lekki Phase 1, Ikeja GRA — command premium rents and attract professional tenants with lower default rates.
• Infrastructure reliability: Estates with borehole water, backup power, and paved internal roads retain tenants longer and justify higher rents. Tenant churn is the silent killer of buy-to-let returns.
• Proven rental history: Ask developers and agents for confirmed rental transaction data in the estate — not projected yields, actual achieved rents. A good agent will have this on record.

Calculating Your Real Return

Gross yield is what developers advertise. Net yield is what you actually earn. The gap matters:

• Agency fees: Typically 10% of one year's rent, paid by tenant — but factor in re-letting costs between tenancies.
• Service charge: Gated estates charge monthly or annual service fees covering security, cleaning, and generator fuel. Confirm this before purchase — it directly reduces net yield.
• Maintenance reserve: Budget 5–8% of annual rent for repairs, repainting between tenancies, and appliance replacement.
• Property management: If you are managing from abroad, professional management costs 8–12% of monthly rent. Non-negotiable for diaspora investors — the alternative is delayed rent collection and unmanaged deterioration.

A ₦150,000/month rental apartment generating ₦1.8 million annually, minus 20% for fees, service charge, and maintenance, still nets ₦1.44 million — a 9.6% net yield on an ₦15 million property. That math holds up.

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