Residential Multi Family

04/22/2012
Residential Multi Family properties often referred to as Multi-Family buildings or apartment buildings, are an asset class of real estate that usually pertains to apartment complexes that contain 5 or more individual residential units. Multi-Family buildings/Apartments are considered residential income producing properties based upon income the property generates from the tenants that reside in the apartment units, e.g. rent. There are several different types and classes and variations of Residential-Multi-Family properties. The two most common styles of Residential Multi-Family properties found throughout the country are;

• Garden Style Apartments
• Mid/High Rise Buildings

Residential Multi-Family Garden Style Apartment:

Garden style apartments are typically referred to a low-rise apartment building. The Residential Multi-Family properties are historically under 5 stories tall and contain a center courtyard/common area in which the dwelling typically surround. These buildings are commonly found in states that enjoy warmer climates throughout the year, and the tenants tend to spend more time utilizing the buildings outdoor amenities such as pools, BBQ areas, sun decks, and gardens. Traditionally these style of Residential Multi-Family buildings can be found on the west coast in cities such as; California, Arizona, Nevada, Texas, etc, unlike the Mid/High Rise properties that make up the iconic New York Skyline.

Mid/High-Rise Building:

Mid/High-Rise Residential Multi-Family apartments are typically tall buildings containing 10 stories or more and unlike the Garden–Style apartments, these buildings tend to have very little to no outdoor space utilized by the tenants. Many of these buildings rely in indoor amenities and surrounding landscape, and due to the size of the buildings; properties are generally equipped with elevator service to transport the tenants from one floor to another. These building tend to be found in larger cities with high density population in colder climate, such as New York, Chicago, Philadelphia, etc.

Multi-Family Asset Class:

In addition to the different styles of Residential Multi-Family properties, buildings are also categorized by class. The class of buildings is determined by several factors, and usually ranges from a grade of D which is at the lower end or preferred spectrum to a grade of A which is highly sought after. In addition to the property class, the location is also graded on the same scale. Properties that are considered Class A assets in Class A location tend to be highly desirable, and command much higher rents for the residential unit. Whereas the properties that fall in to the D grade in both Class and location tend to generate lower rent, which proves the time old saying, when it comes to real estate, it’s all about location, location, location. Some of the factors that go into determining a Residential Multi Family’s class or grade can be subjective to an extent, but there are definite parameters investor’s banks, and brokers use when underwriting or determining value.
As discussed above, asset class is determined by several factors including location. Many building offer their residents several amenities which are commonly found in newer buildings, where as Residential Multi-Family buildings that were constructed much earlier tend not to provide the same services and amenities and which is reflected in determining the properties asset class. Several of the more modern building can be like four star resorts, offering their residents everything from; on-site gyms, media centers, spas, laundry service, to residential units that can rival million dollar homes.

So whether its garden-style apartment located in California or a Mid-High Rise in Downtown Manhattan, all these property fall within Real Estates Residential Multi-Family Asset Class.

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