In every community there are several types of multi-family housing, properties are typically put into one of four property classes. Each “class” of properties has a letter grade. These grades are used to help investors and real estate brokers speak a common language so they can understand a property’s characteristics and condition quickly.
They are as follows:
Class A properties are luxury units. They are usually less than 10 years old and are often new, upscale apartment buildings. Average rents are high, and they are generally located in desirable geographic areas. White-collar workers live in them and are usually renters by choice.
Class B properties can be 10 to 25 years old. They are generally well maintained and have a middle class tenant base of both white and blue-collar workers. Some are renters by choice, and others by necessity.
Class C properties were built within the last 30 to 40 years. They generally have blue-collar and low- to moderate-income tenants, and the rents are below market. This is where you’ll find many tenants that are renters “for life.” On the other hand, some of their tenants are just starting out. And as they get better jobs, they work their way up the rental scale.
Class D properties are where you’ll find many Section 8 in the US or government-subsidized housing tenants. They are generally positioned in lower socioeconomic areas.