Members of the gang are believed to have magical powers which they use to mysteriously appear and disappear during attacks.
"Initially, we thought (the Ibeshe case) was just a case of robbery," said resident Olubare Ademola.
"But we began to take them more seriously when we realised they have been using the same style."
Last month, a man, his 28-year-old wife and two children, were killed in the Odogunyan area of Ikorodu. Other killings have occurred in quick succession.
The gang is said to drain the blood of their victims into a calabash or gourd, then soak it onto a white handkerchief.
"The rumour is that Badoo sells the blood-stained handkerchief to ritualists who use it for money and power charms," said Babatunde Ogunyemi, a traditional chief in Ibeshe, in the south of Ikorodu.
"Each handkerchief costs 500,000 naira ($1,600, 1,400 euros). This explains why Badoo usually wipe out an entire family in order to make more money."
Local people in Ibeshe have turned to traditional methods to fight the gang and claim to have driven them from the area after making animal sacrifices to local deities, according to Ogunyemi.=
Despite the prevalence of Islam and Christianity in Nigeria, belief in black magic (juju) remains widespread, particularly outside the main cities.
A joint military operation has been launched to flush out a number of gangs from in and around Ikorodu, where schoolchildren have also been kidnapped.
"We received an intelligence report that some cultists (gang members) were trying to form an umbrella body called '777' and we quickly moved in to abort it," a senior army officer told AFP on July 7.
As he spoke, soldiers jumped down from a convoy of pick-up trucks and ran towards the Ikorodu creeks in search of suspected Badoo members and other gangs.
"It's going to be a continuous exercise until we are able to make the communities safe and secure," the officer said.
The police in Lagos state said they had arrested and were interrogating some 200 suspects over the Badoo killings.
"Those with no case to answer will be released," said police spokesman Olarinde Famous-Cole.
Lagos state governor Akinwunmi Ambode met with traditional rulers in Ikorodu last week and urged them to collaborate with his government to "arrest this situation as quickly as possible".