Defining class A/B/C multi family properties

[Peter Martin]

Looking at multi-family properties.  How does one define just what makes a property a particular class. I realize it's a subjective decision, but could a section 8 be a class A or B for example?

[Brian Burke]

@Lennon Lee has it right--that's how most people see it.  But you are also right, @Peter Martin, that it is a subjective observation.  And @Bjorn Ahlblad brings up a great point about sellers (and even more so, brokers) tending to overstate by a grade or so.

But now things are even more complicated in that using Lennon's grading scale a class B property could be built in 2002.  But I think very few buyers and absolutely zero brokers would classify most 2002 vintage properties as B class.  In fact, many late 1990s vintage property could also still be A class.

So in response to this you now see brokers inventing new classes.  Now you are seeing AA class, AAA class and I've even seen AAA+ class!  This is born from the industry trying to distinguish a 2001 suburban garden-style class A complex from an urban core mid-rise that just finished construction.  

So I guess that brings us back to the subjectivity of it all.  So maybe you disregard the vintage and think of A class as where you want to live, B class is where you would be willing to live, C class is where you would live if you had to and D class is your housing of last resort and where you'd only go outside in the daytime.

As to your question about A class section 8--yes this does exist.  Some properties are purpose-built for income restricted residents which could include everything from voucher tenants to folks paying the freight themselves but meeting specific household income limits.  These are typically built with some type of government subsidy or incentive such as tax credits for the developer in exchange for the leasing restrictions.