Believe it or not, as an investor you really need to have a better understanding and grasp of the various property classes. The system consists of categorizing properties in three different tiers, which makes it easy to know and understand and determine price and valuation.

Why put properties in different classes? Well, some properties are going to be on a different level or echelon than others.

As an example, you might consider buying a rundown property in a terrible neighborhood because rumors say that they plan on building up the neighborhood over the next 10 years. On the other hand, you might want to buy a pristine mansion in Beverly Hills in one of the most expensive neighborhoods in the country.

BTW – did you know you can invest in real estate with your retirement portfolio?

Would both houses belong in the same property class? Absolutely not! So we’re going to tell you about three different property classes and what they mean to help you have a better understanding as an investor.

Class A Properties

This type of property is considered the cream of the crop. Yes, Class A property is considered the best of the best because it attracts the richest people in the country. We’re talking about entertainers, celebrities, sports figures, and other people that are well off and at the top of their respective fields.

For the most part, a property categorized as Class A is one that is about 10 years old or younger and relatively new on the market. These kinds of properties sell very quickly and they attract people with a great deal of money like the most popular celebrities and entertainers in the world.

As an example, you’d typically find a Class A property in a location with the best schools, the hottest restaurants, the newest buildings, and it’s generally considered one of the areas with the highest priced real estate. You’ll usually notice celebrities and other wealthy people walking around the neighborhood going about their daily lives.

Class B Properties

Real estate categorized as Class B is going to be located in an older neighborhood with slightly older hotspots. Sure, you’ll find excellent schools and a number of tried-and-true restaurants that you’ll really enjoy. But you aren’t going to find the hottest nightclubs or top class Michelin star rated restaurants in a neighborhood like this.

Also, properties found in this category of neighborhood are specifically priced for those working in the middle class. So you’ll find a mix of white-collar and blue-collar workers in the area. And many of the people living in this type of neighborhood are going to live from paycheck to paycheck because they make enough money to get by but they really don’t have a whole lot of extra cash to go around.

Basically, the kind of people living and owning Class B properties include members of the secretarial pool, paralegals, police officers and correctional officers, members of the parking enforcement, reporters and legal correspondence, local radio and TV broadcasters, and people who work in data entry to name a few of the types of jobs that typical Class B property owners have.

Now, no one is saying you have to fit in the middle class in order to own Class B properties. As an investor, you can certainly live in the upper echelons of society and rent your Class B properties to members of the middle class who cannot afford to own their own home.

Class C Properties

As you can probably figure out, people living in Class C locations are members of the lower-class. They typically have lower incomes than the average Americans and they live in much older and more rundown homes. In fact, the average Class C property is 30 years old or more.

In a neighborhood filled with Class C properties, you’ll normally find businesses that you wouldn’t find in middle class or upper class neighborhoods. You’ll notice many pawn shops and check-cashing places in these neighborhoods. They’ll be lots of buildings and tenement housing. And you’ll notice laundromats, dive bars, bodegas, and other establishments usually frequented by members of the lower income classes.

Final Thoughts

It’s pretty clear that there are different property classes that you may want to consider buying. Some people have no problem buying Class C properties at a low price. They can collect their rent from Section 8 and never worry about tenants missing the rent because it’s being paid for by the government. Or you may prefer to buy Class B or Class A properties if you plan to cater to middle and upper-class members of society. It’s your choice to invest in whatever property you desire, so keep these classes in mind and use this information to become a better investor.