Lagos 1-bed at NGN 317.8m: does the rental return justify it?

[watchTheAtlas]

NGN 1,436,000 a month against a price of NGN 317,800,000 is the number driving my decision. It produces the advertised gross return of roughly 5.4% on this Lagos 1-bed, but there may not be much room for overlooked costs.

The building seems sound, although power and energy arrangements could affect the running expenses. I have modelled vacancies, management, routine upkeep and a reserve for larger jobs. Which figures should I verify next—service charges, owner-paid utilities, insurance or property tax—and how would you decide whether the resulting net cash flow is adequate?

 

[plantsAndCairn]

The gross calculation works: annual rent is NGN 17,232,000, or roughly 5.4% of the purchase price. I would focus next on building service charges and any owner-funded power or energy costs, because those could turn a modest gross return into weak cash flow.

Do you have the actual annual service-charge figure, insurance estimate and property-tax position? Also, is this a cash purchase or financed?

 

[plantsAndCairn]

One further point: I wouldn’t choose a target net yield before testing tenant turnover. A vacant period plus letting and refresh costs can hurt more than a smooth annual vacancy percentage suggests. Run separate cases for renewal, one turnover, and an extended vacancy rather than relying only on an averaged allowance.

 

[RealMoss]

Before debating energy performance, I would get the actual recurring bills. A 5.4% gross return can be weakened by several unremarkable deductions rather than one obvious problem, so I do not think energy should dominate the decision.

Request itemised recent building charges and confirm responsibility for shared systems, utilities, insurance and property tax. Then calculate cash flow once without debt and once using the proposed finance terms. If only uninterrupted rent and minimal repairs produce an acceptable result, the purchase price leaves too little room for error.