Michael Obot found himself managing two four-bedroom duplexes on Olu Akerele Street, off Awolowo Way, Ikeja, which the owner initially acquired with plans to occupy. However, the owner’s circumstances changed, leaving the properties vacant and leading to mounting maintenance costs.
“The owner bought these properties to live in, but for some reason, he didn’t move in,” Obot shared.
Faced with the expense of maintaining the duplexes, the owner decided to explore short-term rentals as a solution, and Michael stepped in to manage the properties.
Among the various platforms available, they opted for Airbnb, a popular choice for short-term bookings.
“Rather than leave the properties idle or lease them out long-term, I thought Airbnb could help cover the maintenance costs while earning some profit,” he explained.
Now, two months into hosting, Michael has gained firsthand experience in Lagos’ burgeoning short-term rental market.
This Nairametrics feature explores whether platforms like Airbnb are indeed a smart investment for real estate investors in Lagos, a city where short-term rentals are increasingly seen as an attractive business model.
The growing appeal of short-term rentals
Short-term rentals have gained popularity due to their flexibility for both hosts and guests. Unlike long-term leases, hosts can adjust availability and pricing based on demand, while guests enjoy personalized options that hotels may not offer.
In Lagos, a bustling hub for business and tourism, short-term rentals are becoming a preferred alternative to traditional hotels, offering more space and privacy.
Many find them to be more affordable, especially for longer stays or larger groups, making this business model attractive for property owners.
How to venture into short-term rentals in Lagos
Nairametrics spoke to experienced hosts, including Michael Obot and Amb. Badejo Moyosore, Chief Operating Officer of Deity Homes Int’l Limited, for insights on starting a short-term rental business.
Both emphasized the need to first secure a property, whether through purchase, lease, or inheritance. Obot repurposed his duplexes for rentals, while Moyosore convinced his parents to leverage their properties across Lagos.
Michael Obot registered the two buildings for his short-term rental business with the Ikeja Local Government, paying around N400,000 for certification, which included lawyer fees for the paperwork. He also informed the nearest police station to enhance security.
Both hosts stressed the importance of business registration for credibility. Moyosore went further, obtaining a Special Control Unit against Money Laundering (SCUML) certificate from the Economic Financial Crimes Commission (EFCC) to operate a corporate account in compliance with anti-money laundering regulations.
Obot, though unaware of SCUML, mentioned that he followed security protocols and Know Your Customer (KYC) checks before opening his corporate account.
Key factors for thriving in Lagos’ short-term rental market
Location is key to the success of short-term rentals in Lagos. Ikeja thrives due to its proximity to the airport, central location, and entertainment options. Other notable mainland areas include Surulere, Magodo, Festac, Gbagada, and Yaba. On the Island, Lekki, Ikoyi, Victoria Island, and Ajah are popular choices.
Equally important is setting the property to a high standard, with quality finishing, interior decorations, and entertainment options like TV, streaming services, and even games. The aim is to create a homely yet luxurious space for guests.
Hosts must carefully select guests to protect their property. Generally, only two people should occupy each bedroom. For example, a one-bedroom flat should house no more than two guests, while a three-bedroom apartment may accommodate four to five. This prevents overcrowding, which can lead to damage.
It’s also common for hosts to perform KYC checks, requesting valid ID, contact details, and the reason for staying. Both Obot and Moyosore agree this helps ensure the responsible use of the property and adds security.
Setting up a short-term rental can be capital-intensive. Obot mentioned spending about N15 million to furnish his four-bedroom duplex to executive standards, equipped with all the necessary amenities to attract high-end guests.
Pricing strategies for short-term rentals in Lagos
Amb. Badejo Moyosore explained that he bases his pricing on daily operational costs.
“I break down every expense—whether billed monthly or yearly—into daily figures,” he said.
This includes electricity, cleaning, laundry, security, pay TV and streaming services like DSTV and Showmax. Knowing the daily running cost helps him set prices that allow for-profit while remaining attractive to guests.
Michael Obot agreed with this approach, also factoring in operational costs. He noted that discounts can be offered for extended stays.
“If someone stays longer, a slight discount makes sense,” Obot shared.
Moyosore added that while he owns the five apartments he uses for short-term rentals, those who rent properties for this business must account for daily rent in their pricing. This is an extra cost to consider.
Both hosts also agree on a caution fee of N100,000, which guests must pay before their stay. The fee is refunded after their stay, provided no damages are found. While N100,000 is typical, this amount can vary across properties in Lagos.
For longer stays, such as three months or more, Moyosore may exclude services like DSTV or Netflix.
“I offer a discount, but the guest might cover some extras,” he explained.
Current price ranges for short-term rentals in Lagos
Pricing for short-term rentals in Lagos depends on several factors. For example, Michael Obot, who owns two four-bedroom apartments in the same neighbourhood, doesn’t charge the same rates for both. For the apartment where he allows parties (with strict rules on sound levels and decorum), he charges N400,000 per day.
However, for regular lodging in that same apartment, the rate is between N250,000 and N300,000 per day. In contrast, his second, more executive apartment, where parties are not permitted, has a flat rate of N350,000 daily. This variation highlights the complexities involved in pricing short-term rentals in Lagos.
Additionally, pricing structures differ between property owners and those renting apartments for short-term stays. Location also plays a significant role. For instance, a one-bedroom apartment on the mainland typically costs between N50,000 and N70,000 per day, whereas the same type of apartment in Ikoyi can go for between N80,000 and N100,000 per day.
Here are the average daily price ranges for short-term rentals in Lagos based on property size:
- 1-bedroom apartment: N50,000 to N100,000 per day
- 2-bedroom apartment: N70,000 to N120,000 per day
- 3-bedroom apartment: N90,000 to N180,000 per day
- 4-bedroom apartment: N250,000 to N450,000 per day
Extended stays could attract discounts, depending on the agreement with the host. However, exceeding the maximum number of guests allowed in the apartment could result in additional charges to cover the extra use of facilities and potential wear and tear.
How to attract guests for short-term rentals in Lagos
Attracting guests for short-term rentals can be achieved through multiple channels. Some hosts employ the services of agents, similar to those landlords use to find tenants, but these agents focus on short-stay rentals.
Listing platforms like Airbnb, Booking.com, Nigeria Property Centre, Private Property, and Property Pro are also effective. These platforms offer various premium subscriptions that hosts can pay for to boost the visibility of their properties, ensuring they appear in front of potential guests.
While some platforms charge only subscription fees, others, like Airbnb, take a commission on successful referrals made through their platform.
Social media is another powerful tool. Many short-term rental firms pay influencers, particularly on Instagram (and sometimes X (now Twitter)), to promote their properties.
Additionally, referrals from satisfied guests can be a significant source of new bookings, making it essential to offer quality service that encourages repeat business and word-of-mouth promotion.
The user’s perspective: Why guests choose short-term rentals in Lagos
From speaking with various hosts, it’s clear that guests use short-term rentals for a variety of reasons, ranging from weekend getaways for couples to events like naming ceremonies, traditional marriage introductions, and business meetings.
To gain deeper insights, Nairametrics spoke to some individuals who have used short-term rentals in Lagos, including Ogieva Imaseun.
Imaseun explained that he prefers short-stay accommodations because they offer a more homely feel, giving him greater control over his environment.
“I enjoy the flexibility of cooking whenever I want, which makes feeding cheaper compared to staying in hotels,” he noted.
For him, the kitchen is a significant factor, as it allows him to prepare his own meals at his convenience.
Chibuike Miracle shared a similar experience when he travelled from Port Harcourt to Lagos for his introduction ceremony. Staying in a 3-bedroom short-term rental with his family, Miracle found the space convenient and relatively affordable.
“It was perfect because the family could stay together, plan, and prepare for the big day—something hotels couldn’t provide,” he said.
Privacy and affordability were key factors, allowing his family to have the flexibility and comfort needed during such an important occasion.
Another individual, who preferred to remain anonymous, shared that he uses short-term rentals to spend time with his mistress.
“Hotels don’t give me the privacy I need, and short-term rentals are discreet enough to avoid being found out by my wife,” he admitted, highlighting how the private nature of short-stays is a draw for those seeking seclusion.
Privacy, affordability, and flexibility in location continue to make short-term rentals an attractive option for many in Lagos.
Is Short-term rental a viable investment in Lagos?
From discussions with hosts, short-term rentals are proving to be profitable ventures in Lagos, with the demand for short-stays on the rise.
Amb. Badejo Moyosore mentioned that his apartments are occupied at least 10 days each month, which he finds satisfactory.
Michael Obot, on the other hand, noted that each of his apartments is booked at least once a week, sometimes more, and this works well for him.
Both hosts advise that for those starting out, keeping a lean staff is essential to manage operational costs. However, for those managing multiple properties, like Moyosore with five apartments, additional help may be required while the host focuses on managerial tasks.
Outlook
The short-term rental market in Lagos offers property owners the potential for steady profits, with increasing demand from guests seeking privacy, flexibility, and affordability.
However, hosts must consider the operational costs, fluctuating occupancy rates, and the need for consistent property upkeep to remain competitive.
While experienced hosts like Obot and Moyosore have seen success, new entrants should be prepared to manage the risks and expenses that come with this dynamic but capital-intensive business model.
