Property Class
A grading system (A, B, C, D) based on property age, condition, location, and amenities. Class A are newer, luxury properties in prime locations. Class C/D are older properties in less desirable areas with higher cap rates but more risk.
Key Points
- Understanding property class is essential for evaluating real estate investments
- This concept helps investors compare opportunities objectively
- Our Free Snapshot tool automatically calculates relevant metrics for any property
Related Terms
Cap Rate
Capitalization rate is the ratio of a property's net operating income (NOI) to its current market value or purchase price. It's used to estimate the potential return on an investment property, independent of financing. Formula: Cap Rate = NOI / Property Value × 100.
Value-Add
An investment strategy focused on acquiring properties below their potential value and increasing value through renovations, better management, or repositioning. Value-add deals offer higher returns but require more active involvement.
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