Are you planning on buying a rental property in the Atlanta for the first time? If so, one of the first things that you need to do initially is to learn the property class for the type of the property that you want to buy.
In this article we will share with you a breakdown of real estate property classes so that you know which property is right for you.
Property Class A
A class A location is an area with new buildings, hot restaurants, great schools… and expensive real estate. Tenants earn high incomes and properties have are rarely vacant. This is truly the best location you can find, and the highest-quality tenants want to rent here.
A class A building is generally newer—probably less than 10 years old—and thus has fewer maintenance issues. The building has modern amenities, such as granite countertops and hardwood floors. Properties will be well-located, such as along the waterfront, downtown, or in a suburb, depending on your area.
Class A properties generally command the highest rent but may provide a lower amount of cash flow because of the high-demand for an “easy investment.” That means purchase prices will be higher—and cash flow is lower.
Property Class B
A class B location might be slightly older than its class A cousin, but still has decent restaurants, shopping, and schools. Typically, these areas are 50 percent owner-occupied, with the other 50 percent investor-owned and tenanted. This might be your middle class area, where tenants have a slightly lower income than those in Class A properties.
A class B building is probably 15 to 30 years old. These homes lack the shine of a class A property. Rental income is lower, and maintenance costs are higher due to the age of the home.
However, you can add value here. These properties easily upgrade to a B-plus or even A property with renovations and improvements. Due to the cash flow, growth potential, and exit strategy offered, class B properties create a solid foundation for any investor seeking to build a substantial cash-flowing property portfolio.
Property Class C
Class C locations typically have tenants with lower incomes than in class B areas, and homes are old—30 years or more, without any historical valuation. This area is less desirable, and many properties show visible deterioration. Some may even be boarded up. The neighborhood is likely far away from shopping, restaurants, and public transit.
A class C building, too, is likely older than 30 years and looks the part. They need frequent repairs, so plan for ongoing maintenance. Systems, like plumbing and electrical, may be outdated and require ongoing attention. Properties will typically rent for less—but will be much more affordable.
These properties are predominantly investor-owned and tenant-occupied. While they offer the highest cash flow out of all the classes, they require hands-on, full-time monitoring and management.
Contact JD Homes
For property management in the Atlanta area, contact JD Homes today by calling us at (770) 506-2630 or click here to connect with us online.
