The Three Classes of Multifamily Real Estate Investments

The Three Classes of Multifamily Real Estate Investments

The Three Classes of Multifamily Real Estate Investments

Are you interested in gaining passive income by investing your money in real estate?  Looking for a multifamily investment is a great way to gain an additional stream of income, no matter how involved you want to be in its management.  If you are looking to pursue a multifamily real estate investment, you will want to know the best match for you and your money.  There are three different classes of multifamily investments you can make, and each one offers something different for its investors.  Here is what you need to know about these three classes.

Class A Multifamily Investments

This class refers to the most secure investment you can make with your money.  It has the least amount of risk involved with it.  These investments are usually located in popular areas with strong economics.  Because they have a prime location, they are usually much more popular and easier to find tenants and residents to fill the building.  These buildings often have updated features and new amenities, which make them virtually turnkey.  Class A buildings typically generate a high cash flow and a low risk.

Class B Multifamily Investments

These are step below Class A investments, and they involve a little more risk.  These buildings may be in less optimal shape, slightly older, or require additional work before renting is possible.  Even though they may have once been in Class A, they may now be in an area that doesn't see as much traffic or has gone downhill over the years.  Class B properties typically have higher maintenance fees, because they require more updates or improvements to keep it running smoothly.  They may have fewer amenities, which will cost less rent.  Even though they are stable investments, they will produce a little less cash flow than Class A.

Class C Multifamily Investments

These are the highest risk of the three types of investment properties.  However, this does not mean that they have the lowest reward.  These buildings are generally older and in need of much renovation and repair.  In fact, many people invest in properties that require an entire replacement.  Even though these buildings are in disrepair, they have the ability to produce the most cash flow if they are turned around.  This, however, will require a lot of work and money to make possible.  For those looking to get their hands dirty and create something new, Class C investments are a great option.

These are a few facts you should know about each one of the three classes of multifamily real estate investments before you put money down on one.  Because of the various aspects of these investments, you want to carefully consider the best multifamily investments for you.  Contact us to hear more about how we can help you with your real estate investments today.

 

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