Would you buy a rental in a flood zone?

Question

Hi y’all ! I am looking at making an offer on a rental. List price at $57k. Offer $28,500. It’s in a flood zone. Should rent for $800. What do you all think?

Account Closed · Answer

@Char Silk

Never have, but I've heard flood insurance can be pretty pricey. I'd get quotes and then run your cash flow numbers.

Lynnette E. · Answer

Pretty sure you wont get it a 50% off the list price.

Depending on the area and the type of zoning, flood zones may or may not affect the price. I have a house with a flood zone rating with 'protected by physical structure' Yep a 100+ foot difference from the water high level up to the houses. TVA would have to really mess up for the water to get that high. Another has a flood zone rating, about 8 inches of the edge of the property is in the flood zone. That edge is in a city formed and maintained drainage basin.

Kyle J. · Answer

@Char Silk I usually avoid homes in flood zones that require flood insurance, but at the price point you’re talking about I’d probably consider it.

There are millions of homes in flood zones. If the numbers work for you go for it.

Keep in mind, you’re only required to buy flood insurance in certain flood zones AND if you have a mortgage. I could be wrong, but I’m guessing at a price of $28,500 you wouldn’t be getting a mortgage since very few (if any) banks even offer mortgages at that price point. If that’s the case, you wouldn’t be required to get flood insurance and could essentially self-insur. Just something to think about.

Russell Brazil · Answer

No

Justin Ellis · Answer

@Char Silk I would think as long as the additional expense for the insurance was factored in and you're still able to cash flow decently then why not?

This is not speaking from experience, I'm just into the numbers. If I'm not mistaken they base that on "potential to flood in the next 100 years". If i have appropriate insurance to cover me IN FULL incase of loss, the potential headache seems worth it to me.

I guess if you're double thinking it, throw out an extreme low ball, a number that would make the deal worth it to YOU and whatever happens happens. Nothing to lose if you're leaving towards "no", RIGHT?!

Amy Aziz · Answer

Personally I avoid flood zones.

Would you buy a rental in a flood zone?

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