Types of Multifamily Property
Multifamily real estate is a broad category of commercial real estate the purpose of which is to house individuals and families. These properties can be divided into groups based either on property class or on property size and configuration.
Multifamily properties are commonly divided into four classes based on the age, condition, and location of the property:
- Class A Properties: Class A properties are typically not more than ten years old. They have a full set of common area amenities and very high quality construction. Class A properties are located in higher income areas and target a high-end tenant group. Generally, all newly built multifamily properties are considered Class A properties.
- Class B Properties: Class B properties are from ten to twenty-five years old, are of good quality construction, and are located in middle income neighborhoods. These properties have a unit mix consistent with the neighborhood and the needs of the potential tenants in the area, and have little or no functional obsolescence.
- Class C Properties: Class C properties are typically more than twenty-five years old. They are well built, but often need a higher level of ongoing maintenance because of the age of the property. These properties have few if any common-area amenities and are often located in working class or transitional neighborhoods. These properties may have a more widely varied unit mix and may have some functional obsolescence such as unusual floor plans, small rooms, or limited storage. When properly maintained and managed, these properties will remain well-occupied with a group of tenants very likely to pay as agreed, maintain their units well, and stay a very long time.
- Class D Properties: Class D properties are typically more than twenty-five years old. They may have been well built, but have been poorly maintained and are in need of a very high level of ongoing maintenance. These properties are often located in areas of high crime and often have a high proportion of short-term tenants with a record of poor payment. These are very challenging projects that require a very specialized set of management skills.
Phoenix Multifamily Group, LLC seeks out Class B and Class C multifamily properties selected for their potential for substantial cash flow and substantial appreciation.
Property Size and Configuration
- Plexes: These are very small multifamily properties commonly made up of 2 to 10 individual units. Plexes of all shapes and varieties can be found in residential neighborhoods throughout the US.
- Mid-Sized Apartments – Buildings: Larger multifamily properties from 11 to nearly 100 units are sometimes constructed as single buildings. These properties are commonly found in very dense urban settings where land area is scarce and very expensive.
- Mid-Sized Apartments – Complexes: Larger multifamily properties from 11 to nearly 100 units in more suburban settings are often constructed on larger tracts of land and are made up of multiple smaller buildings from one to several stories high. They may have little more than off-street parking for the individuals that live there, or they may be equipped with a full array of common-area amenities such as pools, weight rooms, outdoor recreation areas, etc.
- Multifamily Communities: Multifamily communities are typically made up of a very large number of units, often spread over a substantial area. These properties are typically 100 to 1,000 units in size and have a substantial complement of amenities to make them attractive to a large number of diverse occupants.
- Mixed-Use Properties: These multifamily properties are typically high-rise configurations with retail or commercial uses on the street level combined with conventional multifamily uses on the upper floors of the property.
Phoenix Multifamily Group, LLC acquires Class B and Class C multifamily properties of the following configurations:
- Plex Properties: Small multifamily properties from 2 to 10 units.
- Mid-Sized Apartments: Multifamily properties from 11 to 99 units
- Multifamily Communities: Large multifamily properties from 100 units to 1,000 units or more.