Are you thinking of buying a multifamily property in a prominent urban location, but find yourself wondering whether you should purchase a Class A, Class B, or Class C property? If so, you have come to the right place.
Although Class A and Class B multifamily properties are always highly desirable to investors, the reality is that Class C properties are also alluring. Class C properties are ideal for a variety of reasons which are listed below.
Why You Should Consider Class C Properties
Always in the Market: From young renters to people living on fixed incomes, Class C multifamily properties are consistently in demand because this asset class typically offers affordable units while having fewer amenities than Class A or Class B rentals.
Expansive and Developing Neighborhoods: You can find Class C multifamily properties in up-and-coming neighborhoods and communities, many with established restaurants, stores, and other fun entertainment in the area.
Profitable ROI: Once purchased, an investor can get plenty of ROI from their class C multifamily property once they put some money into it to get that building in rent-ready condition.
Steady Tenant Base: During tough economic times, Class C multifamily properties also tend to have a stable tenant base due to tenants knowing that they are paying an affordable rent compared to Class A and, to a lesser extent, Class B properties.
Although there are fantastic reasons when investing in class C multifamily properties, there are also risks involved. They generally are older properties that have a lot of deferred maintenance, and possible hidden issues that are exposed when upgrades are undertaken. And in economic downturns, Class C renters can become unemployed, stop paying rent and have to be evicted. They also require significant capital for property upgrades, which can include ADA compliance.
It is pivotal to ask questions regarding high risks when investing in Class C the multifamily investment opportunities. Contact our team at Colony Hills for more information.