In the multifamily investing world, there are various classes of assets that are subjectively categorized based on the following characteristics: age, condition, demographic, etc. We wrote a blog post explaining each of the asset classes. Check it out here. One of the most attractive multifamily classes is Class C assets.
These are characterized as older, working class housing. They are not new builds that cater to the luxury renter or even those that are a few years old. They are considered working class and most residents living here are average income. Generally, people consider class C housing to be the lowest decent class of living before going down to the lower D class, where people live because they have to live there and that is all they can afford.
Why Class C Housing?
Generally, C-class housing offers the most value-add potential. Whereas new builds and class B are brand new and do not offer many opportunities for improvements, class C are existing assets that may benefit from upkeep, improved management, more efficient leasing and bringing rents to market.
Often times, these properties are owned by owners who have had them for years, are burned out or tired and do not have the desire or skill to further improve the property, raise rents to market and grow the value of their asset. As you can see, this creates great opportunities for investors who find a good Class C apartment complex in a decent area.
Because new builds continue to attract the luxury renter, it drives up rents for existing B class assets. The C-class renter may not be willing or able to pay the higher rents of newer apartments, so C-Class presents a great alternative for them. When managed right, a C-class apartment is both safe and affordable, making it the perfect fit for a great quality, hard-working resident who needs decent housing for his or her family.
Robinson Capital
Here at Robinson Capital, we and our partners invest in multi-family assets in select markets, providing quality and safe housing for residents and achieving wealth creation for our investors. We seek value-add opportunities that allow for equity growth through either improvement of operations or physical renovations. We invest in high-growth markets with the proven fundamentals: population growth, employment growth and diversity of jobs. Find out more about us here.
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