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Updated over 7 years ago on . Most recent reply

Account Closed
  • Oakland, CA
58
Votes |
133
Posts

Keep Class A property or buy class C apartment

Account Closed
  • Oakland, CA
Posted
Hello, I have experience on SFH, townhouse, and condo; but I don't have any experience on apartment building yet. Many people said apartment building is a very good investment. It makes me want to buy (experience) an apartment building and try it too. Most of my properties are in Class A and Class B areas with good tenants. Using today market price valve, my class A properties have a return of 6.2% if purchase it using 100% cash. Since I have mortgages on my properties, the mortgage yield a higher return of 7.8% on my class A properties. The class C apartment buildings are selling at the price with 6.5% cap rate. With 30% down payment on the mortgage, the apartment can have a higher cap rate of 8.7%. Should I sell my class A properties (6.2% return), to buy a Class C apartment building (6.5% cap rate)?

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