24/06/2026
❤️To Invest or Not To Invest❤️
We received the attached screenshot - an advert for a house on sale in Limbe. A potential real estate investor asked us at St. Lawrence University Institute Business School to analyze the investment. Here is our analyses
1. Inconsistent and Inflated Financial Claims
There is an immediate mathematical contradiction in the listing's income claims. The advert states that the building generates 8,640,000 CFA per annum. However, it states that there are 6 apartments rented at 100,000 CFA per month.
Gross Annual Income = 6 apartments x 100,000 CFA x 12 months = 7,200,000 CFA.
The advert headline annual income is inflated by 1,440,000 CFA (a 20% overstatement), or it assumes an unexplained premium not accounted for by the actual unit pricing.
2. Extremely Low Gross Yield.
Even if we look past the math discrepancy above, the return on investment (ROI) is incredibly weak for a physical real estate asset.
Using the stated income (8.64M CFA), the gross yield is only 7.2%.
Using the actual units income (7.2M CFA): The gross yield drops to 6.0%.
NB: This is a gross yield. It does not account for operating expenses, property taxes, maintenance, security, waste management, or future tenant vacancies. Once those unavoidable costs are deducted, your Net Yield will likely reduce to 4% – 5%.
3. Severe Negative Leverage
In Cameroon, commercial bank mortgage and loan interest rates typically range above 10% (often 10% to 15%+). If you take a loan and buy this property, you will be paying a high interest rate to buy an asset that only yields 6% gross.
This creates negative leverage, meaning the property will not generate enough cash flow to cover its own debt. You would have to find extra money every month just to keep it afloat.
4. Poor Opportunity Cost
At an asking price of 120 million CFA, your liquidity is completely tied up in a physical, illiquid building that requires active management, tenant disputes, and structural maintenance.
There are safer financial instruments such as high-yield credit union savings accounts that offer comparable annual yields with absolutely zero maintenance, zero vacancy risk, and perfect liquidity.
5. Conclusion
To make a 6-apartment complex worth a 120 million CFA investment, the monthly rent per unit would need to be significantly higher, or the purchase price would need to be aggressively negotiated downward to align with a realistic, high-yielding capitalization rate for local commercial real estate.
The Math is NOT Mathing!
(If you have a potential investment that you want us to analyze for FREE, please feel free to contact us)
