An agent sends you a one-pager. Clean layout, good photos, a headline number near the top: 10% gross yield. It looks strong. You do the mental math against your bank’s savings rate, and the number wins easily.
Nobody on that one-pager tells you that gross yield is the number before the property has cost you anything.
Gross yield is simple by design. Take the annual rent, divide it by the purchase price, and multiply by 100. A ₦180,000,000 apartment renting for ₦18,000,000 a year gives you a clean 10%. It is easy to calculate, easy to compare across listings, and easy to put on a one-page brief.
It is also the number that gives the seller’s side the least work to defend. Gross yield does not ask what the property costs to run. It only asks what it earns before you have spent a single naira keeping it rented.
That is not dishonesty. Gross yield is a real, standard metric used everywhere in property investment, including markets far more mature than Lagos. The problem is not that agents quote it. The problem is when it is the only number quoted, and nobody follows it with the one that actually determines your return.
Net yield starts with the same rent, then subtracts all the costs of holding and managing the property before dividing by the purchase price. In Lagos, that usually means five things:
None of these is exotic. Every one of them is predictable and knowable before you sign anything. What is not acceptable is finding out about them after you have already paid.
Here is a worked example using figures typical of a managed 3-bedroom apartment in Lekki Phase 1.
| Line Item | Annual Amount |
|---|---|
| Purchase price | ₦180,000,000 |
| Annual rent | ₦18,000,000 |
| Gross yield | 10.0% |
| Less: management fee (10% of rent) | ₦1,800,000 |
| Less: service charge | ₦3,000,000 |
| Less: vacancy allowance | ₦1,000,000 |
| Less: maintenance and repairs | ₦600,000 |
| Less: insurance and renewal costs | ₦900,000 |
| Total annual costs | ₦7,300,000 |
| Net annual income | ₦10,700,000 |
| Net yield | 5.9% |
The gross number was 10%. The real number is 5.9%. Roughly four out of every ten naira of yield disappeared between the headline and the bank account, and every single cost that caused it was predictable.
This is not a worst-case scenario. It is a normal, well-managed property with no unusual problems. A poorly chosen development, an inexperienced management company, or a higher-than-average vacancy stretch can push that gap wider still.
The gap between gross and net yield is not just an accounting detail. It is where most of the disappointment in Lagos property yields actually comes from.
Buyers rarely lose money because the market fell. They lose the expected return because the number they underwrote was never the number they would receive. A property bought on a 10% gross yield story, expecting something close to 10% in hand, will feel like underperformance the moment the real figure lands at 6%. Nothing went wrong with the property. The number was simply incomplete from the start.
This matters most for buyers underwriting a deal against a specific return target, whether that is a mortgage serviceability calculation, a comparison against alternative investments, or a hurdle rate set by a fund or family office. Underwrite the wrong number, every decision built on top of it inherits the error.
Before you accept any yield figure quoted to you, ask for the following. A serious advisor will have every answer ready. One who cannot answer these has not done the underwriting, regardless of how polished the one-pager looks.
Every investment brief BCR prepares states both numbers, gross and net, side by side, with the cost assumptions shown rather than buried. We would rather a client see a lower number today and trust it completely than see a higher number and discover the difference after the purchase.
This is the same standard we apply to title verification and corridor analysis. If a number cannot survive being shown in full, it should not be shown at all.
If you are underwriting a Lagos property purchase and want the real yield, not the headline one, we are happy to walk you through the full calculation before you commit to anything.
Want the full underwriting behind a specific property? Book a consultation with BCR or subscribe to BCR Luxury Pulse for corridor-by-corridor analysis every two weeks.
