I thought I'd share some quick thoughts on investing in the area after the recent storms we've had. Hopefully some of you will find these insights useful in making determinations on where and how to invest after these devastating storms.

Some background: I got my start in Real Estate in NY in the aftermath of Hurricane Sandy. I worked with investors on a number of properties that had been flooded during the storm. I moved to Florida in 2017 and have been involved in 45+ flips and currently manage over 36 units throughout Tampa Bay. I'm a licenced Broker and I also handle project management for flippers, contractors, etc.

FEMA 50% Rule: ALL of the homes that exist in a Flood Zone have a 50% limit on work that can be done to repair them without bringing them into compliance with current flood standards. Since most of the homes that flooded took on electrical damage, you will almost certainly need to file a permit to do renovation as you will need the electric company to shut the power off, provide temporary meters, and turn the power back on. (In MOST cases) With permitted work, you are required to file an affadavit that the value of the work being done to a FEMA designated Flood Zone property is not worth more than 50% of the assessed value of the home. If the current tax assesment values the structure at $300,000, you are allowed to do $150,000 worth of work. Pretty straightforward, but I have seen houses where the renovation work approached those limits and building departments asked for more information from contractors regarding costs. It's rare, but it can happen. I don't know about you but I wouldn't want to get caught filing fraudulent Federal documents.

So, let's say you have a major renovation, what does bringing the home into compliance entail? Well, generally it means that the living spaces in the home need to be built about the Base Flood Plain Elevation. A basic breakdown is this: If you're in Flood Zone AE-9, it means the Base Flood Elevation for that home is determined to be 9 feet. The rule of thumb is that in order to be compliant, the living spaces of the home must be built at a minimum of 1 feet above the Base Flood Elevation. So if your home is in AE-9, you must build the living spaces 10 feet above grade.

So what are your options in these cases? There's realistically only two options:

1. Demolish The Home and Build New: You can demolish the existing house and build new. My recommendaiton would be to build the ground level as a "wet basement". You can have an extra large garage on this level, plus some storage, maybe even some covered outdoor living space. If you keep the footprint of the home the same, you can avoid timely and costly site planning applications in most jurisdictions. So long as the impervious area of the site does not change, permitting will be much simpler. The smart play would be to build a two story wood frame structure on top of piers or concrete block in most cases. 35 feet is a pretty typical height limit in most neighborhoods, so depending on elevation you SHOULD be able to build two stories on top of the elevated foundation. It may limit attic space, however you should have plenty of room for Airhandlers, Waterheaters, etc. in the non-living area of the home on the ground floor. I would however recommend elevating anything placed in a non-elevated utility room to ensure damage is unlikely in future storms. I would also strongly recommend mounting outdoor Air Condensers higher up. I had a property I manage where all 4 of our AC Condensers were flooded during Helene. First thing we did was elevate the new units 6 feet off the ground.

2. Lift the Existing House: It's expensive, it's difficult, but we can lift anything. After Hurricane Sandy in NY the vast majority of the houses on the South Shore of Long Island were lifted through various government grant programs. However, no such grants exist at this time for the damage from the recent storms in Florida. The risk in lifting these houses is there's not a clearly established market for flood damaged homes that have been elevated. Lifting a house also takes time. New systems from Arrow Lift allow you to jack a house up in a single day, but I have not seen many contractors in the area that use them yet. You'll need to build a new foundation above the base flood elevation and lower the home onto it. The other problem with elevating an older home, although it helps reduce the risk from future flooding, it doesn't address bringing the rest of the home to current Florida standards. You'll need to look at adding hurricane impact windows and doors throughout the home, and bracing all the framing members of the house with hurricane straps. Not an impossible task, but it winds up being ALOT of work for a home that is still likely to have a number of deficiencies compared to a newly built, energy efficient home.

Now the question I've had a lot of people ask me is: I just bought a concrete block home. Can I demolish the roof and build above it to raise the living space above the base flood elevation. The answer here is . . . generally no. If you purchased a house in Flood Zone X, which does not need to conform to FEMA standards and the 50% rule, yes you could technically do this. In most cases the existing footings on post-war homes build around Tampa Bay are strong enough to build on top of. However, you'll likely only be able to go up a single story unless you reinforce the existing foundation to hold a second story on top. Again, possible, but things do start to get expensive. In properties in all the real flood zones, the problem is you need to make the underlying structure Fema compliant. This means you can't build on top of hollow block. The cells need to be filled with rebar and concrete. Flood vents need to be installed in those block walls. At the end of the day it generally becomes cost prohibitive unless some sort of grant money is released.

The biggest issue I see with the wholesale deals floating around post-storm is that NONE of us know what the ARV is going to be right now. There is absolutely going to be a good deal of money to be made in rebuilding from these storms, but this is the time to be as prudent as possible. If you think you're just going to go in and fix some drywall and resell a house in 60 days in neighborhoods that were battered by the storm for an ARV based on pre-storm sales, you are in for a rude awakening. Buy smart, and do everyone here and throughout the area a favor: Don't rebuild at the existing elevation. It just perpetuates the cycle of insurance and cost of living increases here in Florida. We need to rebuild this area correctly so that it lasts for generations to come.

If anyone has any questions about post-storm projects or deals, feel free to reach out.

Tampa, Florida

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