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:

• Apartment can’t be easily replaced and it appreciates in value if you pick the right location that has strong employment.
• Apartments provide cash flow if you buy the right property in the right location with the right use of leverage and the property’s income (and not just your personal income) can be used for debt.
• Apartments have a multiplier effect because rents rise over time, which means the property value rises.

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