Rental deal in Lagos: NGN 2,038,000,000 purchase, NGN 10,920,000/month — sanity check? (4 bed)

[DirectHarbor]

Before deciding whether to pursue this, I am weighing a tempting gross figure against a much less certain net result. The Lagos apartment is a 4-bed priced at NGN 2,038,000,000, with projected rent of NGN 10,920,000 a month. That produces about 6.4% gross if the rent is achievable.

I have budgeted for empty periods, management, ordinary upkeep and major repairs, but competing supply could affect both rent and occupancy. I still need to pin down service charges, property tax and which building costs remain with the owner. Which cost would you verify first, and what evidence would you want before choosing an acceptable net yield?

 

[yard.red]

The gross-yield arithmetic is reasonable, but I would investigate building service charges and any sinking-fund contribution first. Also establish which costs are genuinely recoverable from the tenant rather than merely listed separately—power and other shared-building expenses can blur that line. I would want a complete schedule of owner-paid costs before deciding what net yield is acceptable.

 

[RueDrew]

Is NGN 10,920,000 a demonstrated rent from comparable completed leases, or just the expected asking figure? That matters more to me than fine-tuning the maintenance reserve. For a 4-bed, one extended vacancy or a rent reduction could move the net result materially. I’d also ask how many similar units are available or due to enter the immediate area.

 

[ezra.crane]

I’d push back on choosing a target net yield before modelling the financing. An all-cash purchase and a leveraged one can react very differently to vacancy and rate changes. Run at least three cases: full expected rent, lower rent with normal turnover, and a prolonged vacancy plus a major repair. Then add insurance, applicable property charges, management and non-recoverable building costs line by line. If the deal only works in the first case, 6.4% gross is not much comfort.