Building class: What makes a Building an A class

[Dulce Beltran]

Hey BP! Am looking into commercial residential and want to know the differences between a class A, B, C buildings. Besides the ubiquitous letter grade, what actually makes the building class a C vs an F aka a war zone? I’m sure it’s location, amenities, proximity, tenants, transportation, population, crime, etc. Is there a specific list I can use as a guide?

[Eleena de Lisser]

A true Class A property in a war zone? Hmm, not sure I'd agree with that. 

Definitions will vary, but when it comes to apartments, some general rules of thumb:

Property Types

Class A: Built within the last decade OR older property that has been very nicely renovated/well-maintained and is located in popular neighborhood

• Lots of amenities (doorman, security system, washer/dryer inside the apartment units, stainless steel kitchen appliances, on-site gym, doggy park, package room, reserved parking, etc.) 
• Convenient/great location near central/downtown business districts, shopping, restaurants, transportation hubs, etc.
• Tenants are typically white collar professionals who can afford to buy a home but choose not to be homeowners

Class B: Property is generally somewhere between 15  to 30 years old, but could be older.

• Some amenities, but not as upscale as a Class A property. (Black kitchen appliances.)
• Located in middle-class to upper-middle class areas.
• Property appeals to the masses (entry-level professionals, college students, seniors, etc.)

Class C: Generally more than 30 years old

• Little to no amenities (for example: no washer/dryer hook-ups inside the units, window air conditioning units/no central AC, white kitchen appliances)
• Located in stable middle-class, working class, or lower income neighborhoods
• Blue collar and entry-level professionals, college students, seniors, some renters who receive housing subsidy (*Sec. 8)
• Potential for stronger cash flow than Class A
• Higher maintenance needs than Class A and B

Class D: Generally more than 30 years old

• No amenities
• Kitchens and bathrooms look very old ("Harvest gold" kitchen appliances)
• Located in areas that may have high crime, high unemployment
• Great cash flow if purchased at a low price, but there is little chance of appreciation