8 Unit Apt Complex Great Deal, but in a flood plane...

[Benji Roberts]

I have been looking for a while for a smaller multi-family place, which are not extremely common on the market near me. I found a great deal on an 8 plex, the agent sent rent roll and some financials and it looks great on paper. They pay $4400 per year insurance for property listed at $225k. Does it sound like that already includes flood insurance? Or will I be required to pay extra for ins? The first floor is a full partly finished basement that he says he just got professionally waterproofed with warranty. How worried should I be about being in flood plane? What else should I learn before making any decision? Thanks

[Roy N.]

@Benji Roberts

Having just come out through a 'once in a century flood' - for the second year in a row ... and the third time in a decade, I would look long and hard before making an offer on a property in a designated flood zone.

Both the climatologists and the insurance companies are saying we need to recalibrate for more frequent, more severe flooding - there is now a new "normal".

 Just this month, an insurance company has started informing property owners in the City (some who are far from the flood plane and tens of metres above flood levels) their policies will not be renewed.  Others are expected to follow suite and either withdraw completely from the area or no longer make flood insurance available.

I would determine where in the flood plane the property is located - are you on the edge, in the middle, or the frontier.  If you take the worst floods on record, how wet would the property be?  How wet has the property been in recent (and average) flood years.

Next I would shop around to various insurance providers and see what nature of coverage they would offer and at what premium.  Not knowing where you are, folks on BP are not going to be able to tell you if your quoted insurance amount is high/low or spot-on for your location.

Waterproofing a basement is only a barrier to ground water (if the soil gets saturated) and will not offer any significant protection against surface water (as in flooding) ... I would also be surprised if the warranty did not have an exemption for surface water/flooding. 

I would also confirm the building has backflow valve on the main sewer line exiting the building.   Here buildings of more than 4-units are also required to have backflow prevention on the water supply into the building (so you cannot contaminate the water supply).