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Let’s continue talking Cap Rate: class and condition of apartments also affects its Trading Cap Rate. Apartment buildings are generally classified in A, B, C, D – four classes.
Class A luxury apartments built in recent years have lower cap rates due to stability, while class D, or distressed assets are trading at higher cap rate, but at greater risk. We like B- and C- Class properties in A and B neighborhoods for contained risk and greater upside.
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Patrick Grimes is a design engineer and CEO and Founder of Invest on Main Street, LLC. His real estate holdings include general partner ownership of a multifamily and single-family real estate portfolio valued over $146M, including 1,950+ units across the southeastern United States and Texas.
He has been active in real estate investment since 2007, including purchasing land and distressed assets, renovating them, and stabilizing them for long-term cash flow. To scale his real estate portfolio, Patrick moved from single-family to multifamily investing and founded Invest on Main Street, a private equity firm specializing in multifamily value-add projects in emerging markets.