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Updated over 8 years ago on . Most recent reply

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Eric Bilderback
  • Real Estate Agent
  • Sisters, OR
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Class C vs B

Eric Bilderback
  • Real Estate Agent
  • Sisters, OR
Posted

If you had a two properties for the sake of argument pencil out to the same NOI. What would be the premium or difference between a class C and a class B property? The B should at least appreciate more so you should at least get a discount for that (assuming you are buying the C). If there is a rule of thumb I haven't heard it. Do you guys any experience or ideas.

Thanks,

Most Popular Reply

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Joseph Gozlan
  • Real Estate Agent
  • Plano, TX
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Joseph Gozlan
  • Real Estate Agent
  • Plano, TX
Replied

dollar for dollar, B class will be easier with better quality tenants and less turnovers. 

In general, both B & C class properties enjoy being in the middle tier so when markets are doing better, D push up to C and C push up to B and when markets are doing bad, A push down to B and B push down to C.

Either way, they are not really comparable for underwriting purposes. 

By the way, I assume you mean area class and not property class. If you have a C class building in a B class area, you can evaluate it as a potential B property given you rehab it accordingly. 

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