Age of multifamily apartment building

[Amber C.]

When you look at multifamily building, how to use “Built in ____” information?

Is there any rule apply to this?

- Building older than certain number value less?

- Cap rate will be different when exit?

[Mack Benson]

Hi @Amber C.. 

There isn't really a hard and fast rule but typically the A-Class apartments have the lowest cap rate and C-Class have the highest. General definitions will have A-Class built somewhere in the last 10-15 years, B-Class 10-25 years and C-Class older. The lower the cap rate the higher the value. Residents are typically willing to pay more for the newest so the rents are usually higher, and so are the amenities, in the new builds.

The key is to know what to expect from a property that was built between year x and year y. For example, apartments built in the 1960's in my area usually had thin walled copper pipes that are prone to failure. There are also considerations I make for different brands of breaker panels and wiring.  

Knowing your market is key to wading through these nuances.