Yes, you can make money from shortlet apartments, but no, it is not automatic. It is important to understand the nuances involved: where the money comes from, how to position yourself in the market, and how to maximize the money that can come in from shortlets.
Short-lets have become a mainstream and highly lucrative investment class. For those with an entrepreneurial spirit and a strategic mindset, a shortlet apartment is more than just a property; it’s a dynamic business venture with the potential for significant returns.
This guide will walk you through everything you need to know to successfully navigate the world of shortlet apartments, from understanding the core concept to avoiding the common pitfalls that ensnare unprepared investors.
A Guide To Making Money From Shortlet Apartments
What Are Shortlet Apartments?
A shortlet apartment is a fully furnished residential property—which can range from a studio to a multi-bedroom unit—rented out for short periods, typically from a few nights to a few weeks. The term “shortlet” is often used interchangeably with “vacation rental” or “Airbnb,” though the latter is a platform, not the product itself.
Think of it as a hybrid between a hotel and an apartment. Guests enjoy the privacy, space, and amenities of a home, such as a functional kitchen, a living area, and often a washing machine, combined with the flexibility and short-term commitment of a hotel stay.
You would therefore be owning and operating a kind of mini hotel. We will get to that later. Now let us talk about why the venture exists in the first place.
Travel:
Most of the people who stay at short-let apartments are travellers who are going to be in town for a few days. In fact, as high as 80% will only stay for two nights. Shortlets therefore thrive on travel. Guests generally do not touch down in a city and then start looking for a place to stay.
They usually book ahead – entire model is facilitated by online marketplaces like Airbnb, Vrbo, Booking.com, and others, which connect hosts with a global audience of potential guests.
Why they choose short-lets over hotels:
Cost-Effectiveness: Often cheaper than hotels for groups or families.
Space and Amenities: More room to spread out and facilities to cook meals.
Authenticity: A chance to live like a local in a real neighborhood.
Unique Stays: From modern penthouses to quirky, character-filled homes.
These are the things to keep in mind; why the guests will choose your apartments. We will discuss these further down the article.
For the investor, the appeal is equally powerful: the potential for rental income that far exceeds what a traditional long-term tenant would pay.
How Shortlets Differ from Regular Apartments
Understanding the fundamental differences between a shortlet and a regular long-term rental is crucial to setting realistic expectations and running a successful operation.
The Revenue Model: High-Risk, High-Reward
Shortlet: Income is highly variable. A property can command a high nightly rate leading to a potential monthly gross of thousands of dollars a year (depending on location) if fully booked. However, occupancy is not guaranteed. There will be vacancies, seasonal dips, and unexpected cancellations. As mentioned above, it is like running a mini hotel so there will be significant operational costs.
Regular Apartment: Income is stable and predictable. A long-term tenant signs a lease (e.g., 12 months) for a fixed monthly rent. The income is reliable, but it has a much lower ceiling.
The Legal and Regulatory Landscape
Shortlet: In Nigeria, the rates can fluctuate quite wildly. In fact, an owner can increase rates as long as there are still people willing to pay.
Regular Apartment: Government often jumps in to prevent rents from going too high, to the point where most people cannot pay. The process is standardized, with less risk of sudden regulatory changes that could shut down your business.
The Level of Involvement and Management
Shortlet: This is where you must pay attention. Remember that you are running a mini hotel. It involves:
Frequent check-ins, check-outs, and cleaning. You also need to respond to inquiries, give local guides, and solve problems 24/7.
You have to market your shortlet apartment aggressively; online and offline. You may even need to put up a sign at the apartment itself so that people passing by can identify it for what it is.
Please note: Real estate agents and property managers can help with the day to day running of the shortlet apartment.
Regular Apartment: This is a more passive, property management-focused endeavor. Once a reliable tenant is screened and placed, your involvement is minimal, typically limited to handling occasional maintenance requests and collecting rent.
The Target Market and Furnishing
Shortlet: Catering to tourists and business travelers. The property must be impeccably furnished, equipped, and styled to create a “wow” factor. This includes high-speed Wi-Fi, a fully stocked kitchen, quality linens, and thoughtful decor. It’s about selling an experience.
Regular Apartment: Catering to residents. Tenants expect a functional, clean, and neutral space. They bring their own personality and possessions. Furnishings are typically not provided, and the aesthetic requirements are far lower.
Key Factors to Consider for a Profitable Shortlet Investment
Success in the shortlet market doesn’t happen by accident. It is the result of meticulous planning and execution across several key areas.
Location, Location, Location
Nobody is going to rent your shortlet apartment if it is located out in the bush. Nowhere else is location more important than with shortlets.
Tourist Demand: Is the area a popular tourist destination? Proximity to landmarks, beaches, or natural attractions is a massive advantage.
Business Hubs: Locations near convention centers, corporate districts, or universities attract business travelers and visiting academics.
Amenity-Rich Neighborhoods: Guests want to be near restaurants, cafes, grocery stores, and public transportation. A walkable, vibrant neighborhood is a huge selling point.
Event-Driven Demand: Is there a major annual festival, sporting event, or conference that creates surges in demand?
Financial Viability
Before purchasing a single key, you must build a detailed financial model. This will help you project whether the venture will bring in money or not.
Purchase Price & Upfront Costs: Include down payment, closing costs, and initial furnishing and renovation budget.
Operating Expenses: Mortgage, power, a generator, utilities, Wi-Fi, cleaning fees, supplies (toiletries, coffee), platform commission fees (Airbnb… etc, etc), and potential property management fees (10-30% of revenue).
Revenue Projections: Research comparable listings in the area to estimate realistic nightly rates and occupancy rates. Be conservative. Don’t make the mistake of thinking that there will be 100% occupancy.
Property Setup and The Guest Experience
Your property is a product, and you have to package and market it as such.
Professional Photography: Don’t use camera phones to take pictures and post online. This is your single most important marketing investment. High-quality, bright, and inviting photos are essential to attract clicks and bookings. Look for a model (you can try instagram) to help with the pictures.
Thoughtful Furnishing: Invest in durable, stylish, and comfortable furniture. Avoid personal or fragile items. Always go for something make of hardwood or metal. Create a cohesive aesthetic.
The “Welcome Pack”: Go the extra mile. Provide high-speed Wi-Fi, a smart TV with streaming services, a well-equipped kitchen, quality bed linens and towels, and a small welcome basket with coffee, tea, and snacks. A clear house manual with Wi-Fi passwords and local recommendations is a must.
Small Touches, Big Impact: Things like USB charging ports by the bed, blackout curtains, a Bluetooth speaker, and basic toiletries can generate glowing reviews.
Dynamic Pricing and Marketing Strategy
You cannot set a price and forget it. You have to be aware of what others are charging.
Dynamic Pricing: Use tools like PriceLabs, Wheelhouse, or Airbnb’s Smart Pricing to automatically adjust your rates based on demand, seasonality, day of the week, local events, and even your competitors’ prices. This maximizes revenue during peak times and improves occupancy during slower periods.
Crafting Your Listing: Your title and description should be compelling and keyword-rich. Highlight what makes your property and its location unique. Are you “Steps from the Beach” or a “Stylish Downtown Loft for Business Travelers”?
Managing Reviews: Don’t rush in; make sure everything is set below going online. This is because the first few reviews you get can significantly Your reputation is your currency. Encourage reviews by being a responsive and helpful host. Respond professionally to any negative feedback, showing potential guests that you are committed to resolving issues.
Operational Logistics: To Self-Manage or Hire?
This is a critical decision that will define your daily life.
Self-Managing: Saves money but requires a significant time investment. You need to be on call for guest communication, coordinate cleaning and maintenance, and handle emergencies. This is only feasible if you live nearby or have a trusted local contact.
Hiring a Co-host/Property Manager: A good co-host (an individual) or property management company will handle everything for a percentage of the revenue (typically 20-30%). This includes guest communication, cleaning, restocking, and maintenance. This cost is often justified by the peace of mind, professional service, and higher occupancy rates they can achieve.
Section 4: What to Avoid When Investing in Shortlets
For every successful shortlet host, there is another (or several others) who underestimated the challenges, and soon went out of business. Here are the critical mistakes to avoid.
Underestimating the True Costs
The “potential income” figure on a platform is a gross number, not a net one. The most common reason for failure is failing to account for all expenses. Vacancy rates, unexpected repairs, deep cleaning, constant replenishment of supplies, and pricey utility bills can quickly erode profits. Always budget for the unexpected.
Ignoring Local Regulations and Estate Rules
Some estates don’t like shortlets. Do not assume short-term rentals are permitted.
Due Diligence is Essential: Before you buy, contact the local planning or the estate residents association to understand the specific rules for your target area.
Noise complaints: Many buildings have covenants that restrict noise. Violating these can lead to massive fines or legal action.
Neglecting the “Hospitality” Mindset
A shortlet is not a “set-it-and-forget-it” investment. Guests expect a hotel-level of service. Failing to be responsive to messages, providing a sub-par cleaning service, or having malfunctioning appliances will result in negative reviews, which are the kiss of death in this business. You are not just a landlord; you are a host.
Over-investing in the Wrong Property or Location
A beautiful property in a location with no demand is a money pit. Do not let emotion override data. A property that is perfect for your personal taste may not appeal to the market you are trying to attract. Similarly, over-capitalizing on renovations and furnishings without a clear return-on-investment strategy can make it impossible to turn a profit.
Poor Guest Screening and Security
While platforms offer some protection, you are ultimately allowing strangers into your property.
Set Clear House Rules: Clearly state policies on parties, smoking, pets, and maximum occupancy in your listing.
Screen Guests: Pay attention to guest reviews from other hosts. For longer stays or larger groups, don’t hesitate to send a pre-booking message to ensure they understand and agree to your rules.
Secure Your Assets: Have a secure lockbox or smart lock system. Consider a noise monitoring device (like Minut) that doesn’t record audio but alerts you to potential party-level noise, and always be transparent about any security measures in your listing.
Trying to Do Everything Yourself (When You Shouldn’t)
Ambition is good, but burnout is real. If you live far from the property or have a demanding full-time job, attempting to self-manage can lead to poor guest experiences, constant stress, and ultimately, a failing business. Be honest with yourself about your capacity and outsource tasks, starting with cleaning, to ensure quality and consistency.
Conclusion
Investing in a shortlet apartment can be a profoundly rewarding venture, offering both financial returns and the creative satisfaction of building a beloved hospitality brand. However, it is a path that demands respect. It is a business of details, from the crispness of the sheets to the precision of your pricing algorithm.
The difference between a profitable shortlet and a financial headache lies in the preparation. By thoroughly understanding the market, meticulously planning your finances, embracing the role of a host, and diligently avoiding the common pitfalls, you can position yourself to capitalize on the growing demand for short-term rentals. Approach it not as a simple property investment, but as the launch of a small, service-oriented business, and you will be well on your way to success.
