A shortlet’s advertised nightly rate is not its profit. To evaluate a Lagos apartment, estimate paid occupied nights, the money retained per night and all operating costs. Then test whether the property still works when bookings are weaker than hoped.
This guide uses a transparent calculation rather than an unverified Lagos-wide occupancy average. It does not establish that returns are rising or falling across every neighbourhood.
Start with four inputs
- Available nights: exclude dates blocked for owner use, maintenance or other reasons.
- Paid occupied nights: distinguish completed paid stays from enquiries and reservations that cancel.
- Realised nightly revenue: account for discounts, refunds and the treatment of separately collected charges.
- Costs: split costs that vary with bookings from costs that continue while empty.
Use records from the actual unit where possible. If the operator supplies a spreadsheet, reconcile a sample against booking statements, receipts and bills. A calendar with blocked dates does not prove paid occupancy.
Worked example: when does it break even?
Assume an invented apartment receives NGN 100,000 per paid night, incurs NGN 25,000 in variable costs per occupied night and has NGN 900,000 of monthly fixed operating costs. These are hypothetical figures, not Lagos market averages.
Contribution per occupied night is NGN 100,000 – NGN 25,000 = NGN 75,000. Operating break-even is NGN 900,000 / NGN 75,000 = 12 paid nights. In a month with 30 available nights, that is 40% occupancy.
| Paid nights | Revenue | Operating balance |
|---|---|---|
| 9 nights / 30% | NGN 900,000 | Minus NGN 225,000 |
| 12 nights / 40% | NGN 1,200,000 | NGN 0 |
| 18 nights / 60% | NGN 1,800,000 | NGN 450,000 |
This balance is before acquisition costs, furnishing, financing, tax and replacement reserves not included in the inputs. It is not a net investment return.
Make the cost schedule complete
Investigate power, water, internet, cleaning, laundry, platform charges, management, security, maintenance, consumables and service charges. Establish which costs the guest pays separately and avoid counting the same amount twice.
Some costs occur per stay, not per night. A one-night booking and a week-long booking can therefore have different margins even at the same nightly price. Build that difference into the model if it matters to the unit.
Check whether the intended use is allowed
Have your lawyer and relevant advisers check the property’s documents, estate or building rules, planning position and applicable registration and tax obligations. Do not assume permission because another unit is advertised online.
The property verification guide covers the purchase investigation. It is separate from the operating feasibility of a shortlet.
Compare with a long-term rental on the same basis
Use the same acquisition cost and time horizon. Compare net cash after the relevant expenses, management work, vacancy and replacement costs. Shortlets may require more active operation; a higher gross revenue figure alone does not establish a better investment.
Questions for a shortlet operator
- Can I review twelve months of unit-level booking and expense records, if available?
- How are cancellations, owner stays and blocked maintenance nights recorded?
- What does the management fee include, and who approves repairs?
- What evidence supports the proposed nightly rate and occupancy?
- What happens to the cash forecast if fewer nights sell or operating costs rise?
Before an offer: complete the calculation with actual evidence and review the Lagos home inspection and running-cost questions.
Method: original contribution-margin calculation. No quoted yield, neighbourhood ban or tax rate is asserted without transaction-specific checking.
Reviewed 21 September 2026. Examples labelled hypothetical are calculations, not market forecasts or personalised investment advice.
