Quote from @Evan Polaski:
@Solomon Rosenberg, how do you assess Class C vs Class B? These are very subjective terms. And you talking property or submarket class? I would argue market and submarket dynamics are far riskier than property class, i.e. a C property from amenities standpoint in an A area will, all else being equal, out perform an A asset in C market.
Was the property that you invested in that lost money marketed as a C property? Did the syndicator specifically call that out in their marketing materials?
I have received many decks over the years from many syndication groups, and I have yet to see any syndicator market anything below B- assets. Clearly I am not on every list of every syndicator, but there are definitely C- (in my opinion) assets in the riskiest parts of major metros being marketed as "low B", or maybe just not rated at all.
At the end of the day, syndicators are generally going to call out all the positives they see in the deal. I have yet to see a syndicator market a deal as "this is a high risk investment due to the current tenant base having a $25k/yr Avg income and the market being one of the top 10 crime markets in the country". What I see is "great opportunity to reposition the asset in the market given its close proximity to the major airport and logisitics centers".
@Evan Polaski You are 100% right, the market and location is much more important than the age and condition of the property itself for the reasons you stated, even in the best markets there are some bad areas.
I don't know if there is a clear definition of the property classes, what I consider class B is built after the mid 80's, and will be somewhere you feel comfortable walking at night, fairly close to shopping and amenities, and have a good amount of middle class renters.
syndicators will always point out all the positives, you have to do your own research on the neighborhood, income level, comps and crime.
