A recent Wall Street Journal article noted that Class A multifamily apartment supply is at a seven year peak that could lead to a potential oversupply shortly. This shift appears to be sending investors toward Class B and C assets where relatively small improvements can add great value to an investor’s report card, provided the improvements make sense.

Today’s mid-market renters have high expectations about basic community amenities, with things like wifi, bicycle parking, open spaces and other ‘new basics’ front and center in what people look for in their next apartment home. The return on investment of these improvements is hard to calculate though few argue they add to an asset’s curb appeal.

Other critical factors in building asset value in B and C class properties are practices for reducing expenses and managing payment risk among a renter population drawn to lower grade communities based primarily on location and price (i.e. where they can afford to live and can qualify for a rental lease). To address these needs, without sacrificing revenue, mid-market operators are taking a two-pronged approach to improved operations. First, reduce expenses where possible. This often leads to renegotiated vendor contracts as well as installation of safeguards to assure timely rent delivery.