CLASS B RENTAL PROPERTIES
Location: Suburbs where neighborhoods are a mixture of tenants and owner occupants.
Property Values: Typically range between $50,000 and $100,000.
Monthly Rents & Cap Rates: Rents range from $850 to $1,200. Cap rates typically range between 10-12%.
Refurbishments: The value added work and finishes are of a high quality rental grade. We systematically use the popular paint color, carpets, flooring, finishes, etc on all Class B assets, which helps to attract good tenants and fast tenant placement.
Tenant Pool: Often lower middle-class income level families. Occupants are non-transient, where tenancies average 3+/- years. Tenants in these turnkey rental properties are often middle-class families with average income levels. Class B tenants tend to be non-transient.
Financing: Investment property in the $50,000 to $75,000 bracket are typically cash acquisitions. However, asset-based lenders exist and a purchase of 3 or more of these properties will usually qualify for financing. Class B real estate investment properties which are priced in the $75,000 to $100,000 bracket will usually qualify for conventional financing.
Exit Strategy: Class B assets are investor favorites due to their location in solid neighborhoods and the relatively high local rents that they command. By the very nature of their performance, these assets will continue to be popular and the rental returns can attract other investors at market prevailing cap rates in years to come. Also, as lending guidelines continue to loosen, this tenant base may also convert to first time buyers, as a mutually beneficial exit strategy.
Lease option strategies can apply.