423: Returns On Class C Multifamily Can Be Deceiving If You’re Inexperienced

Class C value-add projects are a rite of passage for most new multifamily investors. These assets generally have a lower barrier to entry than newer properties and promise higher returns. What most operators learn, however, is that these properties cost a lot more to operate than anticipated, and rent increases are harder to achieve than initially projected. That’s why many operators advance to newer properties. Newer properties can be more profitable to run and can appreciate more because more buyers acquire newer assets. Geoff Kudlacz, Managing Partner of Pacific Sands Funds, owns over 700 C Class units across Kansas City, Texas, and California. With distress appearing in the market, Geoff and his partners are pursuing properties built in the early 2000’s and newer.