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Digital Landlord, Osapa London – Shortlet & Sale

After our meeting yesterday, here is a summary of the strategy and ROI on this portfolio.

  • Purchasing 4 houses in a gated estate
  • 24–7 electricity
  • Clean water treatment and boiler
  • 24–7 security
  • Dedicated in-house care taker / chef
  • Swimming pool
  • Gym
  • Targeted for Shortlet (rooms / entire house)

There are 1.5m who travel to Nigeria each year

Target audience:

  • Nigerians in diaspora
  • Nigerians holding events needing to stay in Lagos
  • Nigerians from other states looking for Shortlet in Lagos (business or pleasure)
  • Expatriates
  • Corporations
  • Tourists – church events, Afro beats events etc

On average Shortlet rooms / homes are booked min 150 days – 250 days in a year.

Where are the bookings made?

  • Booking.com they charge 15% – 20% targeted at expatriates, tourists and Nigerians in diaspora (rooms, houses & apartments )
  • AirBnB they charge 12% targeted at expatriates, tourists and Nigerians in diaspora (rooms apartments & houses)
  • Shortlethomes – our own dedicated Shortlet app for investors targeted at their friends going to Nigeria
  • Local agents in Nigeria

Business Strategy

Built to target business business professionals, corporates, expatriates, high net worth individuals, Nigerians in diaspora looking for a home away from home with all the luxury and comfort you get from a 5 star hotel.

Each room is built to a 5 star luxury hotel standard with a secured lock card however each guest gets to share the beauty of the entire house. They can book the whole house or just a room. Providing privacy for individuals or as a family booking the entire house.

Using booking.com, AirBnB and local agents we can expect a 250 day occupancy in a year however to assure this we will do something different.

We will create our own Shortlethomes site and app for all 200 investors where one investors who is a Nigerian in diaspora can let out the rooms or flats to their friends.

The logic is simple, one investor let’s a room to a realistic 5 guests in a year for a week meaning 1000 bookings in addition to the standard bookings avenues.

So let’s calculate you ROI

You will be getting full forecast from Titi our accountant by Monday or Tuesday however let’s explain it again:

The option you all chose:

You earn of the full rent less cost and fees and in 5yrs we sell off and you earn off capital gain less our fees which is a flat rate of 10%.

Let’s start with bad case scenario:

12 rooms at N30k per night * 250 days

At N30k per night you will really be booked all year round bc it’s dead dead cheap.

N90,000,000 per year

At this rate we have to find a way reduce cost

Remove cost:

Bills: 14m (electricity, internet, chef, caretaker, etc)

Booking Agency fee 12% on airbnb and 15% – 20% on booking.com

Take 15% to be safe

That’s N13.5

Accounts: N3m

Legal: N2.5m

Hospitality: N1.2m

Miscellaneous: N2m

These are estimates and could be lower

Total: N33.2m

I initially made it N50m to be safe and think worst case but let’s do N33.2

Remove 10% fee: N15m

That’s 41.8m

Remove N5m for refurbishment if any

N36.8m to you

So worst case you get: 14% each year which is way more than you get on similar investments

You you make 14% each year in 5 years you make 70%

You sell after 10% appreciation. each year not 16% let’s factor in depreciation

That’s 50% on sale

So in total you get 120% with your Capital back that’s 220%

This is bad. case scenario.

Expected case

– — – — – — – –

Rent at N50k per room 250 days

N150m

Remove cost:

Bills: 14m

Agency fee 12% on airbnb and 15% – 20% on booking.com

Take 15% to be safe

That’s N13.5

Accounts: N3m

Legal: N2.5m

Hospitality: N1.2m

Miscellaneous: N2m

Approx: N45m

I made it N50m to be safe and think worst case but let’s do N45m

Remove 10% fee: N15m

You make:N90,000,0000

Remove 10m for refurbishment

You get N80m

You get 30% each year, that’s 150% in 5yrs

Now if you sell in 5yrs

10% capital gain let’s say we don’t get 16% each year

We sell at N390m less my 10% you still get 40% on sale.

So in total expected case: you get 190% back plus your capital making it 280%

Now let’s be extremely pessimistic

– — – — – — – — – — – — – — –

4 bedroom luxury home, gated estate, swimming pool, gym, 24–7 electricity, care taker, internet, Dstv in prime location.

We rent so cheap like the cheaper ones been rented on Airbnb with lower standards at N60k a night the entire place which to be honest that’s just madness because my flat not a house goes at N55k, it’s a block of flats, the pent house above is N85k a night but let’s go for N60k to be pessimistic.

And if we do this we are booked 300 days a year bc this is just a giveaway.

N72m in sales from 4 houses

Remove your cost you get: 38,500,000

Remove 10%: N7.2m

Refurbishment: N5m (if you make that low you have to go on a budget)

So you making: N26.3m

You are getting 10% * 5yrs = 50%

Sell at 10% appreciation each year for 5 yrs less 10%

You get 90% plus your capital you get 190%

Now when we pay you we pay you as loan back so it comes out as a cost to us. This way it’s up to you to declare your own taxes if you want or not.

 

In conclusion

Even thought Titi has not done the full forecast.

The worst case scenario is not a loss but a profit. Either way you don’t lose out.

And the expected scenario is very profitable.

Anything above that is a bonus.

So what ever we invest affords us what we can buy. Either way as I mentioned to you, I already have one and I am short-letting it as well.

Hope this helps.

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