Multifamily investment properties are generally classified as “A”, “B”,“C,” or “D.” These classifications are somewhat subjective, in the eyes of the beholder, if you will, and definitions vary. Below is a rough guideline.
Class A Multifamily
- Generally garden style properties built within the last 10 years, properties older than 10 years that have been substantially renovated, or high-rise properties in select central business areas
- Command rents within the range of Class “A” rents in the relevant submarket
- Well merchandised with nice landscaping, an attractive rental office, perhaps a club building
- Exterior and interior amenities tend to be high end in line with other Class “A” properties in the respective market
- Construction is high quality, with highest quality materials
Class B Multifamily
- Generally, consists of multifamily product built within the last 20 years
- Exterior and interior amenities are a bit dated, a touch less than what is offered by properties in the higher end
- Quality of construction is good with little deferred maintenance
Class C Multifamily
- Generally built within the last 30 years
- Limited/basic and dated exterior and interior amenities
- Shows some age and deferred maintenance
- Majority of property’s appliances are original
Class D Multifamily
- Generally are more than 30 years old
- Worn, operationally more transient, situated in fringe or mediocre locales
- Shorter remaining economic lives for the components of the property
- No amenities
- Low/marginal construction quality and property condition
- Lower side of rent range with high turnover and density of use