A,B,C,D Graded properties??

[Jason Huber]

I hear all the time about A-B-C-D properties. These letters are used as a guide to describe the condition and the quality of renter one should expect. I get that. My question is, Is this grading subjective or based on a certain criteria? Is it possible that my "B" graded property could be looked at as a "C" grade by someone else? Or, is it because said property has a certain set of characteristics it would be labeled factually in a certain grade. 

Would love to hear about if there is a guideline posted somewhere. 

[Jaysen Medhurst]

Hi Jason,

It's really as much a subjective art as anything else. Here's how I think about it:

A class: White collar/upper-upper middle class, higher-end finishes, very safe neighborhoods, good schools. Cash flow might not be great, but good appreciation and solid tenants. Lots of families, young professionals.

B class: Working class/middle class; nice, not fancy finishes. Properties are clean and neat. Everyone from the successful plumber to the young, professional couples just starting out live here. Safe neighborhoods, maybe location isn't as good as A. Good balance of cash flow/appreciation.

C class: Bit more transient, properties are not very well kept. Perhaps some cars on blocks or couches on the front porch. Really good cash flow, cheap properties, little to no appreciation. Tenants will turn over more, higher chance of evictions. Much more work in property/tenant management.

D class: war zone. not for the faint of heart.