AirBNB has become a synonym for short-let apartments. The idea is simple: ‘hosts’ (property owners) rent their property on a short term basis to guests. In 2007, Joe Gebbia and Brian Chesk, came up with the idea to rent out a floor space in their lounge room. They proceeded to purchase 3 air beds which they advertised on their website and named them Air Bed and Breakfast. A week later they had their first guests at $80 a night, and Just like that Airbnb was born! According to Forbes list Airbnb made a revenue of $6 Billion dollars in 2022 and has assets worth $13.7 billion dollars in 2022.
The increase in demand for short let apartments has been fueled by the covid-19 pandemic that discouraged a lot of physical contact with people in public gatherings such as hotels and other hospitality venues.
In the Nigerian short let market, owners can make as much as 1 million naira per month especially during seasonal holidays.
Short let business in Lagos, Nigeria
The Lagos short-let market has grown by 263% over the past 3 years. Ikoyi, Victoria Island, Lekki Phase 1, Oniru and Ikeja have emerged as the top short let hubs in Lagos, with an occupancy level of 60% to 80% year round. This growth was mainly underpinned by rising demand for both long-stay and short-stay apartments in the wake of the pandemic according to Estate Intel. Findings revealed that short-term rental landlords could make upwards of 20% more than they would on a property rented annually.
This document provides details on the operational plan for the Short-let accommodation, its revenue and cost drivers and projected investment payback period. Investors can expect to get back their return on investment in 5 to 7 years compared to 20 years for long term rentals and then experience year to year profit after each consecutive year. Therefore investing in the Glass Vine will be a wise and strategic business investment with even more significant potential in the years to come.
SELECTING THE RIGHT PROPERTY FOR SHORTLET
Factors to consider when choosing a property for shortlet in Lagos
- Prime location
- Great property Features
- Trusted Property Owner
- Excellent facility management team
- Right brokerage firm for letting out the property
If you found a property that meets all the requirements above then you just might be on your way to starting a rewarding career in the Lagos Short Let business industry. To find a property that checks all these boxes might take a long process.
From researching top locations, going through rigorous searches with real estate agents before finally finding the right apartment which may not be in your choice location.
This might also reduce the profit margin for your shortlet business as you might need to pay for brokerage fees. But you can take the shortcut of investing in our property listings at https://www.arcsglass.com/ one of which is the Glass Vine Apartments, Oniru and here’s why
WHY BUY A ONE BEDROOM THE GLASS VINE FOR INVESTMENT?
Oniru is an attractive location because of its serene environment and proximity to Victoria Island, Lekki Phase 1 and Ikoyi. It offers a perfect blend between commercial and residential life.
Location is often the single most important driving force behind the value of a property. It’s a simple case of supply and demand: Housing supply in great locations is limited by the number of homes in that location.
The Glass Vine boasts of its proximity to Financial Services (Fidelity Bank, First Bank, Access Towers, etc) and Recreational Centers (Landmark Center, Goodbeach, Breeze, Hardrock, Nike Arts Gallery, Shopping Malls and other popular holiday destinations in Lagos). Being along the coastal road guarantees access to four main market segments;
- Tourists (Visitors to the State)
- Business travelers
- Couples on a romantic getaway
- Locals in need of extra bedrooms
Investing in real estate has several benefits, and making a decision to go with the Glass Vine guarantees the following: Predictable Cash-flow, Excellent Return of Investment (ROI), property appreciation.
How much will this cost Me?
Generally, acquiring apartments for a short-let purpose can be capital intensive which is quite relative but the investment returns that follows is mouth-watering. The major cost of investment that would be incurred can be categorized into two (2):
- Acquisition Cost: Eighty five Million Naira Only (N80,000,000)
- Projected Furnishing Cost: 7 Million Naira Only (N7,000,000)
Pricing System
The pricing system is based on what is obtainable in the industry, research shows that 1-bedroom Apartments within Oniru and environs cost within a range of N75,000 to N85,000 per day in an off-peak period and within N90,000 to N100,000 in the period of higher demand.
Factoring in an occupancy rate of 50% annually, which is projected to be even more.
Projected ROI
- Property Purchase Price: N85,000,000
- Average Annual rental Income
Peak Period: Occupancy Rate of 50% – N95,000/day for 182.5 days: N18,250,000
Off-Peak Period: Occupancy Rate of 50% – N80,000/day for 182.5 days: N14,600,000
- Service Charge (Operating Expense): N1,500,000 [2% of Annual income for peak period and 10.3% of Annual income for off-peak period].
Annual Return:
Peak Period: N18,250,000 rental income – N1,500,000 service charge = N16,750,000
Off-Peak Period: N14,600,000 rental income – N1,500,000 service charge = N13,100,000
ROI:
Peak Period: N16,750,000 annual return / N87,000,000 total cost of investment x 100 = [19.3%]
Off-Peak Period: N13,100,000 annual return / N85,000,000 total cost of investment x 100 = [15.1%]
The above scenario implies that a potential investor would have a first-year return of 19.3% on the N87,000,000 cash invested and 15.1% on the N85,000,000 cash invested in a pessimistic projection
Investment Payback Period:
N85,000,000 total cost of investment / N16,750,000 annual return = 5.1 (In five(5) years and a month, a potential investor would have recovered his/her cost of investment)
Investment Payback Period (Worst-case Scenario):
N85,000,000 total cost of investment / N13,100,000 annual return = 6.6 (In 6 years and a half years, a potential investor would have recovered his/her cost of investment)
It even gets better with Investment Appreciation..
It is important to note that In 2022, Bizcommunity.com reported that within (2019 – 2022), the Lagos short let market grew by 263%. With a higher occupancy rate ranging between 60% to 80%.
If the rent increases after the first year, which is a likely case, the ROI would increase from 19.3% and 15.1%, assuming that operating expenses remain within 8.2% to 10.3% of the annual rental income.
Also, Real estate value increases over time, and with a good investment such as this, you can turn a profit after the Investment Payback Period, if you eventually decide to sell.
TAP INTO THIS LUCRATIVE NICHE TODAY AND START MAKING THOSE 8 FIGURES WITH EASE!
Visit https://www.arcsglass.com/ to find out more