What constitutes a B or C property

Question

I am trying to find a rubric of sorts that I can use to determine the grade of a property. I seem to hear what people think is a B or C property actually varies. Somebody told me that each unit between 50-100k would be a good marker, with good rent growth.

Ultimately I want to be able to figure this out so I know how to grade each property and each area. I am currently looking at Racine, WI.

Payton Haight · Answer

got it! It is all subjective, but if you are talking to an agent, wholesaler, other investors, etc. using these grades can quickly communicate general information.

Payton Haight · Answer

Hi Nicholas, When you hear grades for properties, investors are usually referring to the neighborhood rather than the house itself. The grading system is subjective and unique for each market. As you mentioned in your post, A class B property to one investor might viewed as a class C property to another investor based on their own subjective criteria.

In general, 'class A' neighborhoods are the most desirable areas - commonly associated characteristics are: homes in great condition, low crime, and a good choice of nearby amenities. Class D would essentially be the opposite of that. Class B and C would then be some mix between those.

From your post, it sounds like you are trying to grade the condition of actual properties themselves rather than the neighborhood/location. Is that correct? If so, I am curious why are you looking to assign grades to the properties? Is it for tracking in an Excel file or something similar? I suppose you could establish criteria for a grading system for houses. Something like class A properties are in perfect condition and need no work. Class D properties would be a full gut, etc.