Should I utilize the flood zone?

Question

Forst off I am a HUGE rookie. I have been searching for a turnkey duplex for a while that needs little maintenance but will cash flow pretty decent.(First property and we have limited time to purchase and are tired of looking) Yesterday my real estate agent went and looked at a property thats just came back on the market because the previous buyer apparently had some last minute lender issues. The property is 1600 sq ft listed for $179,000 and when my agent got there the seller told her last minute that the property was a in a flood zone. I was thinking of putting in an offer at $170,000 for this reason plus I will have to redo the floors before I move in.

Im getting very impatient and really want to get the ball rolling on my first property but I always will never know my answer until I ask. What would you guys recommend?

Kristie S. · Answer

@Miguel Devaughn

It depends on the severity of the flood zone and if you feel like you could "stomach" a flood and have lots of cash reserves for the rehab time, loss of income etc.  Have you looked up the address to see how it is zoned?  You can look up addresses on the below website.  If it is zoned as AE, I would not suggest buying as a newbie.  We owed a house that was in this zone and flooded 3 times in 8 years.  Was horrible to deal with.  I would be happy to answer any additional questions you have about flood zones.

https://msc.fema.gov/portal/search

Peter Davis · Answer

I recently clipped something from my Realtor Magazine that might be helpful. The National Association of Realtors teamed with FEMA to put together a list of useful articles and resources related to flood zones, flood risk, insurance and the like, see the link below.

Flood Info Resources

Generally speaking I would prefer to be out of a flood zone as others have indicated here, but it will often come down to the specific property itself. For example, in Cape Coral, Florida builders of newer homes (including multi-family) are building at a higher elevation, effectively bringing in more fill dirt, to raise the elevation of the structure. Depending on how the property's elevation (as determined by the Elevation Certificate) compares to the base flood elevation ((BFE) as determined by FEMA) for the flood zone it's in will in large part determine the cost of the insurance.

If you're in flood prone areas, ask if the seller of any target property has an elevation certificate so you can see where the property "stands" in comparison to the BFE. If they don't have one, you should consider hiring a surveyor to provide one during your due diligence, whether you're financing the purchase or not, so you're making a more informed acquisition. Different investors have different risk tolerances so you'll have to decide to move forward or not based on the facts.

Good luck!

Kai Van Leuven · Answer

@Marian Smith

I thought FEMA was my only flood insurance solution but I went through Lloyd’s of London and received a policy that was 1/3 the cost. I don’t know if you have that coverage where you are at but it might be a nice option.

Clint Shelley · Answer

@Miguel Devaughn

Have the seller give you a new flood certificate prior to close. This will tell how much your risk is going to cost. Put it on them. Make them pay your flood insurance for a year.

Clint

Ben Lapane · Answer

@Miguel Devaughn

It depends on the deal 100%. If I’m getting a house in the flood zone I know I’m only getting a deal where it’s basically a super low OOP deal. You say your a beginner, wouldn’t you like to start off with a low OOP deal? My first deal was in an AE zone and my network considers the deal a home run.

A good deal covers a multitude of sins.

Kristie S. · Answer

@Miguel Devaughn

Ouch - an AE zone is the worst kind.  It means that property is in a waterway - an area that the county says is MEANT to flood. Really stupid that they allow properties even in these areas - don't even get me started on that subject.  On the house we owned - we bought it in 1992 and it was not even in a flood zone at that time.  As development grew around us, they slowly rezoned a couple of times.  Flooded for the first time in 2009, then again in 2016 and when Harvey hit in 2017, we had 5 feet of water in the house, 6 feet around the house and could not access our property for 6 days.  Everything in it was a total loss.  We were zoned as AE by that time.  If you choose to buy it just get REALLY good flood coverage and be prepared for it to flood at some point.   P.S. You will want to find out if it has ever flooded as well and how many times.  Good luck.

Peter Davis · Answer

Awesome Miguel! I hope it works out!

Miguel Devaughn · Answer

@Peter Davis thank you so much Mr.Peter! I  am glad you brought up the Elevation m Certificate. We requested it yesterday and will be looking at the readjusted prices today!

Miguel Devaughn · Answer

@Lynn McGeein Thank you so much for the advice and information!

Should I utilize the flood zone?

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