What a 12% return really means
₦150 million in, ₦18 million a year out. Here is how rental yield works, and what eats into it.
Returns, 2 June 2025. 4 minute read.
A 12% annual return sounds abstract until you put naira to it. Invest ₦150 million in an income-producing property at a 12% yield and it produces about ₦18 million a year, or ₦1.5 million a month.
Gross yield and net yield
The figure most often quoted is gross yield: annual rent divided by the price you paid. What reaches your account is net yield, after service charges, maintenance, management, insurance and empty periods. A good investment is judged on net yield.
What moves the number
Vacancies matter most. A home that is let for eleven months of the year earns very differently from one that sits empty for four. Location, condition, fair pricing and good tenant management all keep vacancies low.
Running costs matter for every property. Power, water, security and repairs are real costs in Nigerian real estate and should be in any projection you are shown.
Income plus growth
Rental income is only half of the return. Well-located property in growing cities also tends to rise in value over time. Five years of income at 12% returns 60% of your capital before any gain in the value of the property itself.
Our view
Ask for the net figure, ask what vacancy rate it assumes, and ask how it will be reported to you. At Peermont we show every investor these numbers for a specific property before they commit.
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