Types Of Apartment Classification

There are four different types of apartment buildings used by finance companies to find the value of a property.

Class A MultifamilyDepending on the market, CAP rates in the 4%-6% rangeGenerally, garden product built within the last 10 yearsProperties with a physical age greater than 10 years but have been substantially renovatedHigh-rise product in select Central Business District may be over 20 years oldCommands rents within the range of Class “A” rents in the submarketWell merchandised with landscaping, attractive rental office and/or club buildingHigh-end exterior and interior amenities as dictated by other Class “A” products in the marketHigh quality construction with highest quality materials.

Class B MultifamilyDepending on the market, CAP rates in the 6%-8% rangeGenerally, product built within the last 20 yearsExterior and interior amenity package is dated and less than what is offered by properties in the high end of the marketGood quality construction with little deferred maintenanceCommands rents within the range of Class “B” rents in the submarket.

Class C MultifamilyDepending on the market, CAP rates in the 6%-8% rangeGenerally, product built within the last 30 yearsLimited, dated exterior and interior amenity packageImprovements show some age and deferred maintenanceCommands rents below Class “B” rents in submarketMajority of appliances are “original".

Class D MultifamilyDepending on the market, CAP rates north of 8%Generally, product over 30 years old, worn properties, operationally more transient, situated in fringe or mediocre locationsShorter remaining economic lives for the system componentsNo amenity package offeredMarginal construction quality and conditionLower side of the market unit rent range, coupled with intensive use of the property (turnover and density of use) combine to constrain budget for operations.