A Class properties are usually newer, white collar, nicer amenities, and low in deferred maintenance. Life insurance companies love buying A Class properties as they have long term appreciation.
B Class properties are about 5% to 7% returns plus appreciation. The gold mine is buying B Class properties in A Class areas.
C Class properties are twenty five-years old, have a lot of deferred maintenance, and usually have lots of cash flow. You want cash-on-cash returns at least 8%. The goldmine is buying C Class properties in A Class or B Class areas.
D Class properties are way too risky and often unsafe. Stay away from D Class properties. More management and labor intensive.
Stay away from properties with declining employment or if they are dying.
Here is why apartments can be attractive:
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