Building a spec house in AE Flood zone

[Troy Knight]

I'm curious if anyone has any experience with building a spec house in AE floodplain, especially in Charlotte, NC within Mecklenburg County. It's my understanding that I can build the lowest level of the first floor a few feet above the base flood elevation and the insurance premium would be less than $1,000 per year. If that's the case, we will pay the first 8 years of premiums or something like that when we go to sell. Any advice or experience would be great! Thanks, 

[Matt M.]

Troy Knight

No experience in Charlotte, however with my AE zones we are also given a Base Flood Elevation. BFE. The BFE is the lowest elevation new construction or extensive renovations can be built at. When we build new construction we will set the floor at one foot or more above BFE, as that is where substantial discounts begin to occur (25-40% in my market).

Pier and beam construction is most common here, so we might only spend $2-3000 above bare minimum in construction costs to achieve a $600-1000 yearly discount in flood policy for the buyer. (Is this where you were headed with pre-pay)?

Attached garages can be one of the biggest issues I've faced, as different surveyors and insurance agents view FEMA's guidance differently. I've done carports in lieu of garages to avoid the issue in the past.

Knowledgeable insurance agents can navigate this issue pretty easily, and should be able to provide pricing based upon several different elevations to help determine what would be most beneficial for you.

FEMA sent a letter last year stating flood policy's WILL rise 5-18% per year for the next several years until they reach actuarial soundness. So, if it's a hot area, and your house has cheap flood insurance there should be some positive correlation to sales price.