Defining Key Terms
The four main classifications are A, B, C & D.
A Class Properties
Constructed in recent years, A-class properties are those that demand the top rental dollar in the area. The best amenities justify the price point, in both luxury and location. Typical residents hold white-collar jobs, have money, and could purchase a home if they chose to, but are likely in a transition period in their lives.
B Class Properties
These properties are built within the last 20-30 years, located in quality neighborhoods, and command moderately high rent, though not as high as A properties. Residents are usually a mix of white-collar workers and higher-paid blue-collar workers. Often found in business and commercial districts, there are plenty of shops, eateries, and retail space nearby B-class properties.
C Class Properties
C-class properties are generally 30-40 years old and found in transitional neighborhoods. Blue-collar workers most frequently occupy C properties, and Section 8 tenants often call these properties home. Because of their economic position, these residents are more likely to stay long-term. Often C-class properties hold the highest occupancy rate.
D Class Properties
Typically more than 40 years old and found in the worst parts of town, D properties often include significant deterioration and neglect. Typically, D-grade properties can be purchased at deep discount and may offer substantial cash flow. However, between building and tenant maintenance, the costs often outweigh the benefits.