We’re applying real-world scenarios to these questions to make the insights more relatable and grounded.

Question 1: Mallam Bashir, what should investors consider first when assessing a property’s rental income potential?

The very first thing you need to look at is the location, location, location! It’s the same principle. In Abuja, some areas inherently command higher rents. Think of it like this: a property in Maitama, or Wuse 2 is more likely to attract higher income tenants than a property in a less developed area. Knowing the demand and average rental price is key. So do your research!

Another thing you need to consider while selecting your location is that future infrastructure projects can significantly impact rental income potential. For example:

• The new overhead bridge connecting Maitama and Katampe Main is expected to increase demand for properties in Katampe.
• Planned urban developments or commercial hubs can boost tenant demand and property values.

Key Tip:
Stay informed about government or private sector projects that could affect the area’s desirability. Investing early in such locations often yields higher returns.

Question 2: Okay, location is important, but how do you determine if a location is ‘good’ for rental income? What specific factors should investors look for?

A ‘good’ location depends on several factors that attract tenants. Ask yourself if this location has easy access to amenities such as schools, hospitals, and shopping centers. Does it have good infrastructure? Are the roads in good condition? Is there reliable electricity and water? Is it a safe and secure environment? A property in a peaceful place will attract better tenants and have a higher resale value. So, consider these factors when picking your spot.

Key Tip:
Research rental trends in the area. Look at comparable properties (known as ‘comps’) to understand what tenants are willing to pay. Platforms like online property listings or local real estate agents can provide valuable data.

Question 3: So, now that we know what makes a good location, how does one calculate the rental income potential? What numbers should investors be crunching?

Calculating potential is essential! Investors should always know the numbers. I like to look at two important figures: Gross Rental Yield and Net Rental Yield. To get the gross Rental Yield, you need to divide the Annual Rental Income by the Property Purchase Price and then multiply by 100. As for the Net Rental Yield, you will need to factor in the various expenses, so, subtract the expenses from the Annual rental Income, then divide that by the Property Purchase Price and multiply by 100. These numbers will guide your decisions.

Formula for Gross Rental Yield: Annual Rental Income ÷ Property Purchase Price) × 100

Formula for Net Rental Yield: Annual Rental Income – Expenses ÷ Property Purchase Price) × 100

For instance:

• If a property costs ₦80 million and generates ₦5 million annually in rent, the gross rental yield is:
  (₦5M ÷ ₦80M) × 100 = 6.25%

Key Tip:
Aim for a rental yield that aligns with your investment goals. In Abuja, yields between 5% and 10% are common, depending on the location and property type. Always calculate your net rental yield by subtracting expenses from your gross income. This will help you avoid overestimating your profits.

Question 4: How can I evaluate tenant demand in a particular area or on a particular property?

Tenant demand is a critical factor in determining rental income potential. You will look out for areas that have facilities that can attract tenants to properties. You can also investigate the demand history of a particular area. For instance, areas. near business hubs, educational institutions, hospitals, and recreational facilities tend to attract more tenants.

Example:
A property near the Central Business District (CBD) in Abuja will likely have higher demand from professionals seeking proximity to work. Similarly, properties near reputable schools are attractive to families.

Key Tip:
Visit the area at different times of the day and talk to current tenants or residents. This will give you firsthand insights into tenant preferences and demand.

Question 5: Finally, Mallam Bashir, what is your No 1 piece of advice for anyone trying to assess rental income potential in Abuja’s real estate market?

I will not give one piece of advice, I will give 2. The number one is Network! Network! Network!. Talk to local real estate agents, property managers, and other investors. They have firsthand knowledge of current rental rates, tenant demand, and any upcoming developments that could impact the market. You can also reach out to us at [email protected] – we are always here to help!

My second advice is diversification. Different types of properties attract different tenants, so diversifying your property across multiple types would be a smart move if you can afford it. For instance:

• Luxury apartments appeal to high-income professionals.
• Affordable housing attracts middle-income earners.
• Commercial spaces cater to businesses looking for prime locations.

Key Tip:
Match your investment strategy with tenant demographics in the area. For example, shortlets work well in high-demand areas like Wuse 2, while family homes perform better in serene neighborhoods like Katampe Main.