Many investors in Nigeria still quote gross rental yield and think they are making good returns — only to discover later that after deducting real expenses, their actual (net) yield is much lower.
In 2026, with high inflation, rising maintenance costs, and longer void periods in some areas, calculating true net rental yield has become essential for making smart investment decisions.
Here is the updated formula and practical checklist used by experienced landlords and investors this year.
The Correct 2026 Formula for True (Net) Rental Yield
Net Rental Yield (%) = [(Annual Rental Income – Total Annual Expenses) ÷ Property Purchase Price] × 100
This is the only formula that gives you the real return on your money after all costs.
Full Checklist of Costs to Include in 2026
Use this complete list so you don’t underestimate expenses:
- Maintenance & Repairs – 8–12% of annual rent (higher for older properties)
- Agency / Property Management Fees – 5–10% of annual rent
- Void Periods – Average 2–4 weeks per year (lost rent)
- Insurance – Building and content insurance
- Service Charges / Estate Levies – Monthly or annual fees
- Land Use Charge (LUC) – Annual Lagos or state charge
- Inflation Adjustment – Real purchasing power loss
- Legal & Accounting Fees – Annual compliance costs
- Utility Arrears / Generator Fuel – If not fully covered by tenant
- Marketing Costs – When finding new tenants
Step-by-Step Guide to Calculate True Rental Yield
- Determine your gross annual rental income (monthly rent × 12).
- List and calculate every single expense from the checklist above.
- Subtract total expenses from gross income to get net annual income.
- Divide net annual income by the full purchase price of the property.
- Multiply by 100 to get the percentage (net yield).
Real Examples (April 2026 Market)
Example 1: Lagos Mainland 3-Bedroom Apartment
- Purchase price: ₦95 million
- Monthly rent: ₦850,000 → Gross annual = ₦10.2 million
- Total annual expenses: ₦3.1 million (maintenance, agency, void, LUC, etc.)
- Net annual income: ₦7.1 million
- True Net Yield = 7.47%
Example 2: Abuja Gwarinpa 3-Bedroom
- Purchase price: ₦110 million
- Monthly rent: ₦950,000 → Gross annual = ₦11.4 million
- Total annual expenses: ₦2.8 million
- Net annual income: ₦8.6 million
- True Net Yield = 7.82%
Example 3: Ibadan 3-Bedroom (Lower Cost Market)
- Purchase price: ₦68 million
- Monthly rent: ₦650,000 → Gross annual = ₦7.8 million
- Total annual expenses: ₦1.9 million
- Net annual income: ₦5.9 million
- True Net Yield = 8.68%
Common Mistakes Investors Still Make in 2026
- Using only gross yield (very misleading).
- Forgetting void periods and agency fees.
- Ignoring annual LUC and service charges.
- Not factoring in inflation (real return is lower).
- Assuming 100% occupancy all year.
Final Thoughts
In 2026’s challenging economic environment, knowing your true net rental yield is the difference between a good investment and one that only looks good on paper.
A property showing 12% gross yield can easily drop to 6–8% net once all costs are included. Always calculate properly before buying.
The goal is not just high headline yields — it is sustainable, realistic cash flow after every expense.
Do you currently calculate net yield on your properties? What has been your actual net yield in 2026? Share your numbers or questions in the comments below.
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