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Real Estate Asset Classes
As many of you know, Nighthawk currently owns properties in five different markets spread across the southeastern United States, most particularly focusing in on Atlanta, Georgia, as well as Huntsville, Alabama.
We also have properties in the North Carolina markets, specifically the metro areas of Raleigh, Durham, as well as Charlotte.
You may be wondering about what we look for in a market.
In order to talk about that, here's a refresher about how real estate is categorized. Properties are identified by asset class. You’ll hear properties labeled as Class A, Class B, and Class C.
Class A properties are the high end.
They’re the most expense buildings, the most elite units. They’re also the newest buildings – rarely more than 10 years old, and they have all of the latest amenities that luxury renters want.
Class B properties are a step down. Still nice, they tend to be a little bit older. They’re not quite as luxurious, perhaps the location requires a bit more of a commute to the city center.
And Class C properties are going to be even older and tend to be what we think of as workforce housing. These buildings are going to need more in the way of repair and are possibly located in less desirable neighborhoods.
How do asset classes figure in to our decisions when looking for investment property?
It's a crucial aspect of our business model that we look for buildings that have a problem we can fix – rents are too low, for instance, or there’s a need for new landscaping or better appliances. Maybe expenses are too high or there’s an occupancy issue.
These are things we can improve upon, raising the value of the property and making it a better place for our renters to live.
With a solid renovation plan, we find there’s a lot to be gained with Class B and C properties.
Class B and Class C have the highest potential for cash flow, with Class B being the sweet spot.
We look for is the opportunity to add value to our properties. And we look for certain things in regard to location, as well.
We like markets where the population is growing, and where the population is young. People between the ages of 20-39 are prime rental population and obviously, that’s what we want to see. We also like to see industry – particularly tech jobs.
This is the case in Charlotte, for example. They were ranked number one for tech jobs by Glassdoor. Rent increases have been strong there and there’s an influx of population.
At the same time, it’s one of the most affordable big cities in the U.S.
So we’ve been focused on two specific markets right now, Atlanta, as well as Huntsville, but we branch out into other markets because we want to offer the greatest potential for good investments for our investor base.
That is always at the heart of our mission.
