Multi-Family Classifications

If you are in the market for multi-family housing, something to keep in mind is the investment classification of the RE you are interested in purchasing. After a quick google search, I found this classification scale from a financial loan company. This was prompted by a conversation I had with an agent in Ohio. I had heard office and retail space referred to with classes but never MUF. This makes sense and something to keep in mind. Pretty universal items to note:

Class A Multifamily

  • Generally, garden product built within the last 10 years

  • Properties with a physical age greater than 10 years but have been substantially renovated

  • High-rise product in select Central Business District may be over 20 years old

  • Commands rents within the range of Class “A” rents in the submarket

  • Well merchandised with landscaping, attractive rental office and/or club building

  • High-end exterior and interior amenities as dictated by other Class “A” products in the market

  • High quality construction with highest quality materials

Class B Multifamily

  • Generally, product built within the last 20 years

  • Exterior and interior amenity package is dated and less than what is offered by properties in the high end of the market

  • Good quality construction with little deferred maintenance

  • Commands rents within the range of Class “B” rents in the submarket

Class C Multifamily

  • Generally, product built within the last 30 years

  • Limited, dated exterior and interior amenity package

  • Improvements show some age and deferred maintenance

  • Commands rents below Class “B” rents in submarket

  • Majority of appliances are “original"

Class D Multifamily

  • Generally, product over 30 years old, worn properties, operationally more transient, situated in fringe or mediocre locations

  • Shorter remaining economic lives for the system components

  • No amenity package offered

  • Marginal construction quality and condition

  • Lower 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

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