If you are new to the real estate world, you may be hearing a lot about Class A, Class B, Class C, and Class D properties. And if you are wanting to know what it means and why it’s important, then we are here to tell you! These classes of real estate are similar to grades that you got in school, though the “grade” isn’t quite as cut and dry as a school grade, it can give you a lot of insight into the property that you are getting yourself into. Your A may be a B in my book, and what I consider an F, you may consider to be a C. You may also hear things like “I have an A property in a B area.” Then you also might hear about + & – properties, which is an easy way to add or subtract “points” from a property without knocking it into a completely different category of classification. So, lets talk about classes.
Class A Properties
Class A properties are the cream of the crop. They are newer properties (normally less than 10 years old) that find themselves in the midst of excellent school districts, active shopping and restaurant districts, and high cost real estate. They usually have premium amenities, high incomes, high rent, and well educated tenants. These kinds of properties are expertly managed, need little to no maintenance, and while they usually command a high rent, they will also typically generate a lower cash flow.
Class B Properties
Class B properties are a step below Class A properties. They are slightly older properties in slightly less attractive surroundings, though they may still have access to good schools and shopping districts. These properties may or may not be professionally managed, but they are normally well maintained, and will attract primarily blue collar workers. The beauty of these properties is that they are “value-add” properties, which means that as renovations take place, the property has the ability to move from a Class B to a Class A property.
Class C Properties
These properties are less desirable properties that are in undesirable locations. They are occupied by lower income individuals and will probably require extensive renovations, including things like plumbing and electrical issues. These properties are more affordable than Class A or Class B properties, but they will also bring in lower rents and the chances of them being brought up to an A or a B are slim, as it would take a huge amount of time, money, and strategy to bring them up to the higher standards. Here are Magnolia Design Properties, we are primarily interested in Class B properties, these include B, B,- and B+ properties. We are “value add” investors looking for capital improvement opportunities that can yield higher rent premiums and a strong cash on cash return. Our goal is to obtain properties and bring them up to a higher class, whether that is going from a B+ to an A or from a B- to a solid B. If you are an investor looking to start investing, contact us today! Magnolia Design Properties is here to build long term relationships with interested investors. So if you are looking to invest in multi-family properties known as apartment complexes, that can grow in value, call us today at 1-844-428-9776 to start the journey of investing with us!
