Flood Plain Considerations
Hi everyone, I found a property that looks like it might be a decent buy, the catch though is it's in a high risk flood zone because it's on a creek. Just wondering what adjustments I should be making to my model to account for the additional risk?
It looks like it has about a 14% chance of flooding in a given year and a 61% in a five year period per FEMA. I'm thinking I should take the deductible for the flood insurance and multiply it by the annual probability of flooding to get an expected annual cost due to flood damage. Does this method make sense and is there anything else I'm missing?
Also, would taking mitigating steps (i.e. building a retaining wall or regrading) increase the property value or just help reduce the risk to my bottom line?