REAL ESTATE • INVESTMENTS • METRICS
Class A properties are generally newer buildings that are in excellent condition and have high-quality amenities. These properties are typically located in prime locations, such as downtown areas or affluent suburbs. Class A properties attract high-end tenants, such as businesses and professionals who are willing to pay premium rents for top-quality facilities.
Investing in Class A properties offers several benefits. They are generally easier to lease, have lower vacancy rates, and are more likely to retain their value during economic downturns. However, Class A properties also come with a higher purchase price and often require significant upfront capital investment.
Class B properties are older buildings that are generally in good condition but may require some upgrades or renovations. These properties are located in less desirable areas than Class A properties but still offer attractive amenities and features. Class B properties attract middle-income tenants, such as families and young professionals, who are willing to pay reasonable rents for good-quality facilities.
Investing in Class B properties can be a good way to generate solid returns without the high upfront costs associated with Class A properties. However, Class B properties often require more maintenance and upkeep, and may experience higher vacancy rates than Class A properties.
Class D properties are the riskiest of all the property classes and are generally considered to be the most speculative investment. These properties are typically in poor condition and located in low-income neighborhoods with high crime rates. Class D properties are often distressed, foreclosed, or in need of significant repairs.
Investing in Class D properties can be highly profitable if the investor is able to turn the property around and improve its condition. However, these properties come with the highest risks, including high vacancy rates, difficult tenants, and a potential for low returns on investment.
Types of Real Estate:
There are numerous types of real estate assets with each asset having defining characteristics that make it valuable.
Land
The first investment type is land which may have either geographic or physical attributes that make it desirable to own. Land can be utilized in many ways and can become highly valuable based on its geographic location or ability to change the use of the land for a specific purpose. In many cases, there is a capital investment necessary to increase the value of land. This could include preparing the land for building through the installation of water, sewer, electricity, drainage, etc. It could also include the addition of agriculture or trees.
Examples of land real estate: Undeveloped raw land, farms & ranches, timberland, orchards, recreational parcels (camping, hunting, fishing), lots in subdivision
Residential
Residential real estate is utilized to house individuals. Residential real estate ranges from single-family houses to large condominium complexes to mobile home. Residential real estate makes up a large amount of the wealth of individuals in the United States given the cost to purchase a home and price appreciation over the time the individual owns the home
Examples of residential real estate: Single family homes, condominiums, town homes, mobile homes
Commercial
Commercial properties are used for general business purposes and generate income for investors.
Examples of commercial real estate: Multi-family apartment complexes, office space (buildings, office parks, medical centers), retail, self-storage, parking lots & garages
Industrial
Industrial real estate properties use can vary dramatically but in most cases are properties that develop, manufacture and hold goods and products.
Examples of industrial real estate: manufacturing, refrigerated storage, storage warehouses & distribution centers, data server farms
Learn more about real estate and other real assets such as infrastructure and natural resources by downloading our Guide to Real Assets white paper.
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*Financial projections or returns displayed on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results.
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