Building a new D Class Property?

Question

In my area, the vast majority of new multifamily builds has been A-class. No one is focused on D-Class which makes me think that no one has figured out the economics of building affordable housing. Has anyone had success?

Nick B. · Answer

You cannot build a class D property. But you can buy or build A class and let it deteriorate to eventually become a D.

Gino Barbaro · Answer

@James McGovern

A D Class property is based on age, and location. Investors are building LIHTC, and other affordable projects in these areas, but new multifamily can not today be built to support the rents that a D area has.

Eric Gerakos · Answer

You can build a D class property. Just build a new property, knock some holes in the walls and urinate in the corner. See what kind of tenant your “affordable housing” attracts….

Gregory Schwartz · Answer

The US government is the only one that 'successfully' builds Class-D.

Subsidized housing is a classic example; https://en.wikipedia.org/wiki/Subsidized_housing_in_the_Unit...

For more examples visit any barracks on any base in America. But if you really want to be impressed go to Camp Lejeune (Semper Fi)

Matthew Paul · Answer

The costs of land  , engineering , site work , permits , labor , and building materials make this virtually impossible . then there are zoning issues and the rest of the politics that go along with this .  Then factor in the amount that people can afford .

Unless the government pays for it , it cant be done . And once the government gets involved it will cost even more

Nicholas Mann · Answer

Hey James,

I think as investors/builders/syndications/and developers build new properties they have to put up significant capital. They build and invest to help improve the area, bring in better tenant pool, improve the economy and hopefully at the end of the day make a profit on the hard work, time, and money spent on that new development.  There is no hard grading system on investment properties so “Class D” would be a subjective term but ideally it would refer to the “state/condition” of the property, “quality/affordability” of the tenant base and the “rent/income” it could provide.  Class A would be all good/great categories in this regard and Class D would refer to the worst/bad properties in those neighborhoods.  Simply said the development of a lower income area is not too make that new construction “Class D” but to improve the overall area for everyone that lives nearby.

Building a new D Class Property?

Most Popular Reply