Four plex Analysis in Bismarck/Mandan North Dakota

[Nels Lund]

Hi all,

I am a new investor in the Bismarck/Mandan area of North Dakota. I have an off market deal I am considering that is a four plex built in 1940 a few blocks from downtown Mandan. The building is approximately 2400sf with 3 units being 2bed/1bath having approximately 600 sf each and one unit that is 1bed/1bath and slightly smaller than rest. The units currently rent for $500-$550 each and one has been vacant several months due to a previous water leak in the unit and is being repaired/renovated. In total rent should be $2075 currently and about $75-$100 a month in laundry income. The parcel the building is on is being divided as there are two buildings on it and I am told by the city assessor taxes should be about $1900-$2000/year for this property. The water bill averages about $233/month when fully occupied and the heat bill and common elec is $137 (Not sure if that is when its fully occupied so I rounded up to $175). I used 10% each for maintenance and capital expenses, 6% for property management, and 5% for vacancy in my calculation. I have an insurance quote of $1250 for the year. And lastly the purchase price is about $217,000 and with the financing we have the monthly cash flow I get from my calculation is only about $110 for the property. I included photos of a couple of the units one of which is being renovated. What are your thoughts on this deal? Do my calculations and analysis look correct? Is the purchase price too high? Do you think the rent is the going rate for units this size? At first I thought rents could be raised but doing more research in our market I am not so sure they could go any higher right now. Any input is greatly appreciated!