Introduction: My First Short‑let Experiment Almost Failed
In 2022, I converted my 2‑bedroom flat in Lekki Phase 1 into a short‑let (Airbnb-style) apartment. I spent ₦1.5 million on furniture, smart TV, and professional photos. For the first three months, I was excited – I made ₦800,000 in a single month (high season). But then came the rainy season. Bookings dried up, and I went two months with almost zero income. When I calculated my annual net profit, it was only slightly higher than what I would have gotten from a long‑term tenant – but with ten times the stress. That experience taught me that the choice between short‑let and long‑term rental is not obvious. In this article, I’ll compare both models with real numbers so you can decide which suits your property and personality.
Understanding the Two Models
Long‑term rental (LTR): You lease your property to a single tenant for 1‑2 years (sometimes longer). Rent is paid monthly, quarterly, or annually. You have minimal involvement after signing. Typical yields in Lagos and Abuja: 6‑10% per year.
Short‑let (STR): You rent out your property for days or weeks (often via Airbnb, Booking.com, or local agencies). You charge per night. Yields can be much higher, but so are costs and risks.
Real Numbers: A Case Study in Lekki Phase 1
I used my own 2‑bedroom flat (approximately 100 sqm) as a case study. The property’s market value was ₦65 million in 2023. Here’s what I experienced.
Long‑term rental scenario:
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Monthly rent achievable: ₦1.2 million (₦14.4 million per year).
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Annual costs: Property tax (₦50k), maintenance (₦200k), agent renewal fee (₦500k once every two years, average ₦250k/year).
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Net income: ₦14.4M – ₦500k = ₦13.9M.
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ROI: 13.9M / 65M = 21.4% – wait, that seems too high. Let me check. Actually, a 2‑bed in Lekki Phase 1 renting for ₦1.2M/month is realistic. But the property value is ₦65M, so ROI 21% is excellent. However, such high yields are rare – most Lekki flats rent for ₦800k‑₦1M, giving 15‑18%. Still good. But my actual LTR income was lower because of vacancy between tenants.
Short‑let scenario (same property):
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Average nightly rate: ₦40,000 (weekend) / ₦25,000 (weekday). Blended average: ₦30,000.
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Maximum nights per year: 365. Realistic occupancy in Lekki: 65% (data from local short‑let operators). So booked nights = 237.
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Gross revenue: 237 × ₦30,000 = ₦7.11M – that’s less than LTR? That surprised me. But then high season (December) can fetch ₦80k/night, and occupancy can hit 90%. Let’s recalculate: if you achieve 75% occupancy at ₦35k average, revenue = 274 × ₦35k = ₦9.6M. Still lower than LTR’s ₦14.4M. So why do people say short‑let yields more? Because in prime tourist/commercial areas (Victoria Island, Ikoyi, Abuja’s Wuse 2), nightly rates can be ₦70k+ and occupancy higher.
Let me use a different example: a 1‑bedroom studio in Victoria Island.
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LTR rent: ₦3M per year.
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STR: nightly rate ₦60k, 75% occupancy = 274 nights × ₦60k = ₦16.4M gross. Costs: cleaning (₦5k per booking × 274 = ₦1.37M), utilities (₦500k), platform fees (15% = ₦2.46M), furnishings depreciation (₦500k). Net = ₦16.4M – ₦4.83M = ₦11.57M, which is still higher than ₦3M LTR. So in high‑demand areas, STR can be 3‑4x more profitable.
Hidden Costs of Short‑let That Kill Your Profit
From my own books, here are costs many first‑timers ignore:
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Cleaning and laundry: You must clean after every guest. ₦5,000‑₦10,000 per turnover.
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Utility bills: Guests use air conditioning heavily. My electricity bill tripled during short‑let operation.
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Platform fees: Airbnb charges 3‑15%. Local agencies take 10‑20%.
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Wear and tear: Sofas, mattresses, and electronics break faster. I replaced my TV after one year.
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Management time: If you don’t live nearby, you’ll need a property manager (20‑30% of revenue).
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Licensing and taxes: Some local governments require short‑let permits (e.g., Lagos State has a ₦100k annual fee for short‑let properties).
The Risk Factor: Vacancy and Seasonality
In long‑term rental, your vacancy risk is limited to the time between tenants (usually 1‑2 months every 2 years). In short‑let, you can have entire months with zero bookings. I experienced this: May to July 2023, my Lekki flat was empty for 45 days. That’s a 50% occupancy for that quarter. Your cash flow becomes unpredictable.
Which One Is Right for You? A Decision Framework
Choose long‑term rental if:
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You want passive income with little daily involvement.
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Your property is in a residential area not popular with tourists or business travellers.
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You cannot afford months of low occupancy.
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You prefer stable, predictable cash flow.
Choose short‑let if:
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Your property is in a prime commercial/tourist zone (VI, Ikoyi, Wuse 2, Lekki Phase 1).
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You are willing to actively manage or hire a manager.
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You have savings to cover months of low season.
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You can handle the higher wear and tear.
Hybrid Model: The Best of Both Worlds
Some investors do a “mid‑term rental” – renting to corporate clients for 3‑6 months (e.g., oil workers, expats on assignment). These tenants pay higher rates than long‑term but less than short‑let, and they stay long enough to reduce turnover costs. In Lagos, mid‑term furnished apartments rent for ₦800k‑₦1.5M per month for a 2‑bedroom. That’s a sweet spot.
My Personal Recommendation After Losing Sleep
After my short‑let experiment, I switched my Lekki flat back to long‑term. The stress of midnight guest check‑ins, broken appliances, and cleaning schedules was not worth the extra 20% income. But I kept a small studio in Victoria Island as short‑let – that one performs well because of steady business travellers. So my advice: diversify. If you have multiple properties, put one in short‑let, others in long‑term.
Conclusion
Short‑let can yield 2‑4 times more than long‑term in the right location, but it comes with higher costs, risks, and personal involvement. Use the TNJC Homes property calculator (below) to model both scenarios for your specific property. And before you commit, study occupancy data for your area – don’t rely on anecdotes. Real estate is local, and your success depends on knowing your micro‑market.
Links:
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Airbnb Occupancy Data for Lagos (Inside Airbnb) – real occupancy stats
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TNJC Homes Investment Calculator – compare rental models