Home > Apartment Loan Center > Multifamily Property Investment Classification Multifamily Investment Property Classifications Crefcoa provides multifamily housing and apartment loans where the building is classified as “A”, “B”, and “C” as long as they are acceptable in both physical condition and market attributes. The building classifications are as follow and may vary from market to market. Multifamily Property Classifications Overview Class A Multifamily Generally, garden product built within the last 10 years

Properties with a physical age greater than 10 years but have been substantially renovated

High-rise product in select Central Business District may be over 20 years old

Commands rents within the range of Class “A” rents in the submarket

Well merchandised with landscaping, attractive rental office and/or club building

High-end exterior and interior amenities as dictated by other Class “A” products in the market

High quality construction with highest quality materials Class B Multifamily Generally, product built within the last 20 years or an older property recently renovated

Exterior and interior amenity package is dated and less than what is offered by properties in the high end of the market

Good quality construction with little deferred maintenance

Commands rents within the range of Class “B” rents in the submarket Class C Multifamily Generally, product built within the last 30 years or an older property recently renovated

Limited, dated exterior and interior amenity package

Improvements show some age and deferred maintenance

Commands rents below Class “B” rents in submarket

Majority of appliances are “original" Class D Multifamily Generally, product over 30 years old, worn properties, operationally more transient, situated in fringe or mediocre locations

Shorter remaining economic lives for the system components

No amenity package offered

Marginal construction quality and condition

Lower side of the market unit rent range, coupled with intensive use of the property (turnover and density of use) combine to constrain budget for operations What You Need to Know Class A assets -- and Class B assets located in major markets -- typically command more interest from lenders. Life companies, pensions, REITs, agency lenders and conduits aggressively pursue Class A assets. As a result, you can expect: More financing options

Lower rates

Longer fixed rate terms and amortizations

Higher leverage

Asset is primary source of collateral with no personal guarantees (non-recourse)

Lower debt service coverage requirements (as low as 1.15)

Depending on the market, CAP rates in the 4%-6% range Class B and C assets lose some interest from institutional investors and borrowers typically obtain financing from banks, agency lenders and specific purpose REITs. As a result, you can expect: Fewer financing options

Slightly higher rates

Fixed rate with balloon terms or 5 year resets

75%-80% leverage

Non-recourse for assets located in major markets

Recourse for assets located in secondary and tertiary markets

Depending on the market, CAP rates in the 6%-8% range Class C and D assets tend to be financed by local banks with little to no interest from secondary market lenders. As a result, you can expect: Limited financing options

Rates 100-200 bps higher than higher quality assets

Shorter fixed or floating rate terms

65% (75% for strong sponsors in major markets) leverage with no option for secondary debt

Personal recourse

Depending on the market, CAP rates north of 8%