North Dakota's cities have plenty of small apartment buildings: 1960s and 1970s eightplexes and twelveplexes in Fargo, Grand Forks and Bismarck, plus buildings added during the oil boom in the west.
In short: You can finance a 5 to 8 unit building in North Dakota with a LendingStreet DSCR loan that qualifies on rent, from $150,000 with no stated maximum and 30-year terms available. The rent has to cover principal, interest, taxes and insurance at 1.0x on standard programs, and sub-1.0 programs exist. In North Dakota, winter operating costs, Red River flood exposure and the oil economy in the west are the local items to check.
Fargo and West Fargo have the most small buildings in the state, many of them 1960s to 1980s walk-ups near North Dakota State University, the downtown core and older neighborhoods north and south of Main Avenue. Grand Forks has a similar stock near the University of North Dakota. Bismarck and Mandan have small complexes from the 1970s and 1980s near the Capitol and along the main commercial corridors.
In the western oil region, Williston, Dickinson and Watford City added apartments during the Bakken boom, and Minot has a mix of older buildings and newer stock tied to Minot Air Force Base. Rents in the oil towns have swung with oil prices, so lease history matters more there than in Fargo or Bismarck.
| Area | Typical buildings | What to check |
|---|---|---|
| Fargo, West Fargo | 1960s to 1980s eightplexes | Heat, roofs, student turnover |
| Grand Forks, Bismarck | Small complexes | Snow removal, parking |
| Williston, Dickinson, Minot | Boom-era buildings | Rent swings with oil prices |
Start with the rent roll. Add the in-place rent for each unit and, for any vacant unit, a market rent the appraiser can support. Then divide by the full payment, including taxes and insurance. That ratio needs to be 1.0x or higher on standard programs.
Utilities the owner pays, such as common-area electric, water, sewer and trash, are not part of the DSCR payment on most programs, but they are part of your real cash flow. Budget for them separately so the deal still works after the loan closes, not just on the term sheet.
Leverage on 5 to 8 units varies by program and is often below the 80% purchase maximum available on smaller rentals. Cash-out refinances go up to 75% LTV, and seasoning rules vary. If the ratio comes in short, lowering the loan amount or using a sub-1.0 program are the usual fixes.
| Term | What to expect |
|---|---|
| Property type | 5 to 8 unit residential rental |
| Loan amount | From $150,000, no stated maximum |
| Purchase LTV | Up to 80% on some programs; often lower on 5-8 units |
| Cash-out LTV | Up to 75%; varies by program |
| Minimum DSCR | 1.0x standard; sub-1.0 programs exist |
| Credit score | 620 minimum |
| Income documents | None; qualifies on rent |
| Borrower | LLC standard; sign for the loan personally |
North Dakota does not charge a real estate transfer tax, so closing costs on a 5 to 8 unit purchase are mostly title insurance, recording fees, the appraisal and lender costs, all of which appear on your term sheet and closing statement.
Property taxes are set by local levies from the city, county, school district and park district, and they vary by city. Fargo and West Fargo also have special assessments for streets and flood protection that show up on the tax statement. Use the full current statement, including specials, and expect the value to be reviewed after a sale.
North Dakota winters are long and very cold. Heating costs, snow removal and frozen pipes in vacant units are real expenses, and many older walk-ups have owner-paid heat through a shared boiler. Ask for 12 months of utility bills so you can budget accurately.
Fargo and Grand Forks sit along the Red River, which has a long history of spring flooding, and both cities have invested heavily in flood protection. Check the current FEMA map and get the flood determination and insurance quote early, since flood coverage, if required, counts in the ratio.
This example is illustrative and not a quote. An investor buys a Fargo eight-unit building for $820,000. Each unit rents for about $925 a month, so gross rent is $7,400. Property taxes are budgeted at $900 a month and insurance at $350. The owner also pays about $400 a month in utilities and common-area costs, which affect cash flow but are not part of the DSCR payment.
At 75% LTV the loan is $615,000. On 30-year amortization, principal and interest is about $4,300, so the payment with taxes and insurance is about $5,550 and the DSCR is about 1.33x.
That clears the 1.0x standard minimum. After the owner-paid costs, about $1,450 a month is left before vacancy, repairs and management, which is why a realistic expense budget matters as much as the ratio.
| Item | 75% LTV |
|---|---|
| Purchase price | $820,000 |
| Gross monthly rent | $7,400 |
| Loan amount | $615,000 |
| Principal and interest | $4,300 |
| Property taxes | $900 |
| Insurance | $350 |
| Monthly payment (PITI) | $5,550 |
| DSCR | About 1.33x |
North Dakota's landlord-tenant law sets rules for deposits, notices and entry. Some cities have rental inspection or registration programs, so check locally before you close and ask the seller for any open notices.
Buildings near NDSU and UND often rent on academic-year leases that turn over in May and August. A rent roll with lease start and end dates helps show the income is stable across the year, and a property manager with student experience can keep vacancy down.
In Williston, Dickinson and Watford City, rents rose very fast during the boom and fell when oil prices dropped, then recovered in part. Underwriting looks at current leases and market rent, but it helps your file to show how the building performed through a full cycle, including occupancy during the slow years.
In Fargo, Bismarck and Grand Forks, demand is steadier, tied to health care, agriculture, universities, government and a growing technology sector. Those markets usually support standard leverage on a well-kept building.
Most delays on small apartment loans come from missing items. Start with these.
Our investor loans are business-purpose loans on non-owner-occupied property. Tell us about the building: address, unit mix, rents, taxes, insurance and the loan you have in mind. We will run the numbers, flag any local issues that could affect the file and give you options. Fill out the form below or call (877) 298-1001.
Nine or more units is commercial financing, covered on our multifamily loans page.
No. North Dakota does not charge a real estate transfer tax. Closing costs are mostly title, recording, appraisal and lender costs.
It can be if rents have swung widely. Expect underwriting to look closely at current leases, occupancy and market rent. A full year of rent history helps.
If the building is in a mapped flood zone along the Red River or its tributaries, flood insurance is generally required, and the premium counts in the ratio.
Special assessments billed with property taxes are part of the tax bill, so plan for them in the payment and your cash flow.
On our programs, 1 to 8 units is residential, so 5, 6, 7 and 8 unit buildings qualify for a DSCR loan on rent. Nine or more units moves to commercial financing.
Purchase loans go up to 80% LTV on some programs, but 5 to 8 unit buildings and larger balances often get less. Plan for 20% to 30% down plus reserves, depending on the program and the ratio.
No. The loan qualifies on the building's rent. You need a 620 or higher credit score, reserves and entity documents if you buy in an LLC.
Vacant units can often be counted at a market rent the appraiser supports, but some programs want a minimum number of units leased. It varies by program, so tell us about vacancies up front.
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