Short-term rentals in Lagos: Can platforms like Airbnb offer smart returns for investors? 

However, his circumstances changed, and the properties sat vacant, leading to mounting maintenance costs.

“I bought these properties to live in, but for some reason, I didn’t move in,” Obot explained.

Faced with the expense of maintaining the duplexes, Obot decided to explore short-term rentals as a solution. Among the various platforms available, he 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 me cover the maintenance costs while earning some profit,” he shared.

Now, two months into hosting, Obot has gained firsthand experience in Lagos’ burgeoning short-term rental market.

This Naijaonpoint 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.

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.

Naijaonpoint 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.

Obot also registered his business with the Ikeja Local Government, paying N400,000 for certification, and informed the nearest police station for added 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.

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.

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 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.

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.

Pricing for short-term rentals in Lagos depends on several factors. For example, Michael Obot, who owns two four-bedroom apartments in the same neighborhood, 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:

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.

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.