Class C properties range in age up to approximately 40 years old. The price point is dependent on location, broken bones, weeds to pull, and fences to whitewash. Class C properties offer investors great value-add opportunities. Class C will consist of mainly older properties and offer opportunities that can be found in above-average conditions. Amenities offered in Class A and Class B properties typically will not be found in Class C properties.
Interior and exterior improvements, even minor, are huge value adds. Some examples include the completion of interior or exterior renovations and sub-meter utility services. Adding amenities such as a business center or movie room will help keep properties from becoming obsolete. These changes and additions raise the potential to increase rents, occupancy, and NOI.
Price point dictates an investor’s opportunity to locate class C properties in stable submarkets. A word of caution to operators investing in declining markets is to “do your homework.” Newer properties in declining markets take longer to add value when waiting for markets to improve. However, there are plenty of C Class properties in stable- neighborhoods with greater potential for growth.
In summary, approximately 1,500 of my 4,000 units were class C products. I found that there were countless opportunities for value add. I like the value add opportunity that this product class offers. The cash flow and returns can make your day.