Class C Portfolio
A “Class C” Portfolio is comprised of “Low-Range” single family residential, Town homes, and condominiums and are usually leased by “Low-Income” tenants. These properties are relatively older and many times have “Deferred Maintenance”, meaning that mechanical fixtures such as HVAC, Water heater, Dishwasher, etc. might be older and need repairs or need to be replaced.
Depending on location and age, these properties can potentially be within areas that have higher crime rates. Also properties built in the 50’s and 60’s were not built under the same codes/standards and, if built on alluvial soil, can potentially have extreme foundation problems.
While possibly generating higher returns between 8%-12% “On Paper”, not factoring property appreciation or depreciation, investors need to be aware that these property types also, in our experience, have higher turnover rates. Also In our experience, tenants who lease these properties will produce increased wear and tear.