An example of a Type “A” investment is a 38 unit apartment complex on S. Moreland (Cleveland within the Shaker Heights school district and North of Buckeye) which requires a 25% down payment, small capital improvements and closing costs.
Through stabilizing factors such as; raising rents, reducing expenses and reducing principal, investors can expect an average annual return after the 1st year of 10 – 11%. Ultimately as properties are sold, values appreciate and principal is reduced, we can estimate geometric average annual returns to around 17%.
There may be times when a Type “A” Investment (non-distressed & occupied with a 3—5 yr holding period) may have components of the Type “B” Investments where significant capital improvements are made to the Type “A” investments.