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When you’re looking to buy a property, what is it really worth? That seems like a simple question, but the answer is more complex than you might think. The truth is, a single property in Bismarck can have three very different values depending on your goal. Are you buying it to live in? As a long-term investment? Or are you trying to figure out how much rent to charge? For new investors, understanding these three different valuation methods—the “3-Way Valuation”—is the first step toward making a smart and profitable decision.
Valuation #1: The Homeowner’s Perspective (Sales Value)
This is the value most people are familiar with. When an appraiser determines the value for a standard home sale, they primarily use the “sales comparison approach.” In simple terms, they look at what similar nearby homes—often called “comps”—have sold for recently. They compare features like square footage, the number of bedrooms and bathrooms, garage size, and overall condition to arrive at a price. This number represents what a typical homebuyer, who plans to live in the property, would be willing to pay. It’s about the emotional and practical value of a home in the current market.
Valuation #2: The Investor’s Perspective (Income Value)
An investor plays a different game with different rules. While comps are important, a serious investor is primarily concerned with one thing: cash flow. Appraisers use a method called the “income approach” to determine what a property is worth as a business. This method looks at the potential gross rent, subtracts operating expenses (like taxes, insurance, and maintenance), and calculates the Net Operating Income (NOI). The property’s value is then determined based on that net income. In short, the more income a property can generate, the more it’s worth to an investor, which can be very different from its value to a homeowner.
Valuation #3: The Landlord’s Perspective (Rental Value)
The third piece of the puzzle is figuring out what you can realistically charge for rent each month. This is a separate analysis that requires a deep dive into the local rental market. For years, a “quick and dirty” rule of thumb was to charge around $1.00 per square foot. However, in today’s Bismarck market, that number is outdated. Based on current data from mid-2025, the average is closer to $1.20 – $1.30 per square foot for a typical multi-family rental. A 1,000-square-foot, two-bedroom apartment, for instance, now averages around $1,215 per month. Accurately assessing the going rate for rent based on the property’s size, location, and amenities is crucial for ensuring your investment will be profitable from day one.
Putting It All Together for a Smarter Investment
A property’s value is not one-size-fits-all. A home might have a sales value of $300,000 to a family, an income value of $280,000 to a conservative investor, and a rental value of $2,400 per month to a landlord. As a new investor, your advantage comes from understanding all three angles. By analyzing the sales value, the investment value, and the true rental value, you can see the complete picture, identify genuine opportunities, and avoid costly mistakes.
When you have a vacant property, there are always options. Sell, rent, a combo of both of these, or sit and hold. When you need ANY of the three valuations or ALL 3 – call me. Realtor, property manager, and real estate nerd.
Thanks for reading,
Bill Dean
