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  • Nancie Grace

Property Class in Real Estate: Where to Invest in Turnkey Rentals?

Updated: Sep 1, 2020

For real estate investors, you’d probably hear someone asking you, what property class do you prefer to invest in? And you will likely read comments or hear people talk about being in class A, B, or C location. Neighborhoods are classified as a bit more subjective.

Different states in the United States and cities may offer different variations on how the classifications are ranked. Each class has different risks and rewards. Thus, it is important that you need to do your due diligence to know which property class will be the right investment for you.

Class A

Typically, class A property is a nicer and bigger home in a neighborhood with great appeal. You will see the bells and whistles. This type of property tends to be in areas where properties are newer and have larger place, the school districts are fantastic and great amenities. And the price for such is in 200K to 300K range. Typically the rent for this neighborhood is quite high.

Class B

B-class property is in an area less than a typical A class neighborhood. It is in a neighborhood on its way to a class A neighborhood. The neighborhoods in this type of property are consist of less owner-occupied houses compared to Class A property. Class B property is usually in areas that are a little older but very well kept with low crime rates.

Class C

C-Class property is in the neighborhood on its way to class B neighborhood. Class C property is cheaper compared to class B property as the property could be 20 years older. Class C property tends to have the lowest rental rate compared with class A and class B property.

Where to invest in turnkey rentals?

You would probably not invest in Class A properties as the CAP rate for such is low. It probably ranges from 3 to 6 percent CAP rate. While Class B and C properties tend to be purchased and sold at higher CAP rates.

If you are a real estate investor of turnkey rentals, class B and C properties may be the better options for a better capital appreciation and better investment option.

To know more about turnkey rental investment or Memphis turnkey visit our website or give us a call at 901 308 2815


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