Calculate returns, compare properties, and make data-driven investment decisions
ROI & Cap Rate
5-Year Projections
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Total upfront investment for cash purchase
Monthly: ₦0
Average in major Nigerian cities: 10-20% annually
ROI measures your annual return relative to your total investment. It accounts for cash flow and considers your down payment and initial costs.
Good ROI in Nigeria: 15-25% annually
Formula: (Annual Cash Flow ÷ Total Investment) × 100
Cap Rate measures the property's potential return if purchased with cash, excluding financing costs. Higher cap rates generally indicate better value.
Good Cap Rate: 8-12% for Nigerian properties
Formula: (NOI ÷ Property Price) × 100
Cash flow is the money left after collecting rent and paying all expenses including mortgage. Positive cash flow means the property pays for itself.
Target: Positive cash flow from month 1
Formula: Monthly Rent - Total Monthly Expenses
The time needed to recover your initial investment through cash flow. Shorter is better, but appreciation also contributes to total returns.
Typical Range: 5-10 years for rental properties
Formula: Total Investment ÷ Annual Cash Flow
A good ROI for rental properties in Nigeria typically ranges from 15-25% annually. Lagos properties in areas like Lekki often achieve 18-22% ROI, while Abuja averages 12-18%. Consider both cash flow and property appreciation in your calculations.
Rental yield = (Annual Rental Income ÷ Property Price) × 100. This is similar to cap rate but doesn't deduct expenses. In Nigeria, good gross rental yields range from 6-10% depending on location and property type.
Include maintenance (5-10% of rent), property tax, property management fees (10% of rent), insurance, repairs, vacancy costs, and mortgage payments. Don't forget one-time costs like legal fees and agency commissions.
Mortgages allow leverage - you can control more property with less capital. If your ROI exceeds the mortgage interest rate, financing makes sense. Cash purchases offer simplicity and lower monthly expenses. Nigerian mortgage rates typically range from 12-18%.
Projections are estimates based on current data and assumptions. Nigerian property has historically appreciated 10-20% annually in major cities, but this can vary. Use conservative estimates and review annually to adjust your strategy.
NOI is annual rental income minus operating expenses, excluding mortgage payments. It shows the property's profitability before financing costs. NOI is crucial for calculating cap rate and comparing properties objectively.
Let Holford Homes help you find high-yield rental properties with verified documentation and expert investment guidance.
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