TMR BLOG: Understanding Difference Between A, B, C, D Multifamily Asset Class

If you are planning to invest in a new apartment or rental home, then you may choose multifamily properties. However, before you invest in one, you should know that multifamily properties are divided into separate classes. 

Here’s a quick overview of these classes: 

Class A Multifamily Properties

This is the top class of multifamily apartments that are known for their luxurious characteristics. Located in one of the most coveted neighborhoods of the city, these properties are known for the following features:

  • These properties are crème de la crème apartment buildings, usually built within the last ten years.
  • They are often located in posh, select business districts of the city, which is why the average rent of these properties is quite high.
  • It’s mostly the white-collar employees and elite class of the society who own or rent these properties.
  • They often feature granite countertops, hardwood flooring, and refined appliances and equipment. Bathrooms feature exotic fixtures and tile work. These properties are perfectly landscaped for a classy appeal.
  • Occupants can enjoy best-in-class amenities, such as resort-style swimming pools, full-service gymnasiums, pet parks, rooftop patios, and picnic areas.
  • The buildings are constructed with the best quality materials that ensure longevity.

Class B Multifamily Properties

A step below the Class A properties, Class B multifamily have some of it’s own unique characteristics. 

Below are some of their features:

  • These properties are usually 10 to 25 years old and may have undergone renovation in the recent past.
  • The buildings feature dated interior and exterior amenities. Interiors often feature laminate or vinyl flooring, solid surface kitchen countertops, well-finished cabinetry, and black appliances. However, these offerings are less than what a typical high-end property would offer. 
  • They are located in decent neighborhoods of the city.
  • Given their slightly lower average rent compared to Class A properties, Class B properties have a middle-class tenant base, which includes both blue and white-collar employees. Occupancy in these properties is more of choice than a necessity.

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Class C Multifamily Properties

Compared to the previous two multifamily asset classes, Class C multifamily properties can be starter properties for some renters. Here are a few features of these properties:

  • These properties were constructed within the last three or four decades.
  • These properties command a below-the-market average rent. Their tenancy profile is low-to-moderate income people and blue-collar workers. Tenants start with renting these properties before moving on to Class A or Class B properties as their careers progress.
  • The interior and exterior amenities are limited but dated. Improvements represent some deferred maintenance and age.
  • Investors like these properties for their cash flow potential. Making improvements to a Class C property located in a Class B area gives them the best deals.

Class D Multifamily Properties

Lastly, Class D multifamily properties are apartments that most people tend to avoid. Below mentioned are a few of their features:

  • These properties are built more than four decades ago in lower socioeconomic areas of the city.
  • Their tenancy profile is mostly government-subsidized, Section 8 tenants.
  • Deferred maintenance, high vacancies, and high crime location, they tend to command low rents. But they do require heavy security and intense management. 
  • Most of these properties feature poorly constructed and worn out interiors and exteriors.

When all the four asset classes are compared, Class B and Class C seem to be the middle ground for people. These properties offer much-needed luxury at an affordable price.

– The Multifamily Review Team

Ep. 25 – Pizza Shop Treatment – Interview w/ Frank Roessler The Multifamily Review Podcast

Frank Roessler is the founder and CEO of Ashcroft Capital, a real estate investment firm headquartered in New York City. Prior to forming Ashcroft Capital, Frank gained over a decade’s worth of acquisition and asset management experience at M&A Real Estate Partners, a national multifamily investment firm.As of 2020, Ashcroft Capital has acquired over $1 billion of assets and 10,000 units. The firm focuses on capital preservation while striving to return strong, risk-adjusted cash on cash to investors. The firm is capitalized with high net worth, family office and institutional capital. Within the real estate industry, Ashcroft specializes in value-add real estate and exhibits an expertise in extracting maximum value from every asset it acquires. Rather than attempting to play cycle timing, the firm strives to acquire excellent apartment communities within well-located submarkets of large and growing U.S. metroplexes.Frank has a Bachelor of Science degree in electrical engineering from Bucknell University and an MBA from the Anderson School of Management at UCLA.Contact Frank Roessler and Ashcroft CapitalVisit Ashcroft Capital: LinkAshcroft Capital on LinkedIn: LinkContact Ashcroft Capital: LinkFrank Roessler on LinkedIn: Link
  1. Ep. 25 – Pizza Shop Treatment – Interview w/ Frank Roessler
  2. Ep. 24 – My North Star – Interview w/ David Deitz
  3. Ep. 23 – Past Due Rent Collection – Interview w/ Greg O'Berry
  4. Ep. 22 – Be The Joneses – Interview w/ Chase Harrington
  5. Ep. 21 – Negotiating Multifamily Access Agreements – Interview w/ Kevin Gardner

Hi, my name is Michael Avent. I founded The Multifamily Review in 2020. I’m a Commercial Agent at Northcap Multifamily located in Las Vegas, Nevada. My vision for The Multifamily Review is to be the most trusted resource for all Multifamily Investors and Industry Professionals. We strive to offer the best and most up to date content to our readers and are always open for suggestions. Make sure you sign up to join our newsletter to stay up to date on our latest blog, ebook, and more exclusive content that’s coming your way! The Multifamily Review team and I look forward to building a deeper relationship with you!

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DISCLAIMER: The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the multifamily industry.

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