Surprise! I need $3,300/yr flood insurance.

[Tone Church]

I am under contract for a two-family property in New York State. My deposit check has already been cashed and the appraisal was just performed for my FHA loan. I got a note from my lender today letting me know that the property is in a 100-year flood zone and I need flood insurance. This is the first time I am hearing about this.

I got a quote on a policy from my insurance agent and it will cost me $3,300 per year, or $275/month, which eats substantially into my rental profits. Any advice anyone?  

[Jeff Greenberg]

That certainly is a good reason for retrading. On a property in Houston we knew that we were i a flood zone and one that had high winds. We fought against the lenders requirement of full replacement value of 3.2 mil on our 1.3 purchase. Our 11 Cap deal dropped to a 9 cap when we received an insurance quote at $1100 per door on a 62 unit property. Something does sound wrong with 3300 on a duplex. You should be able to get FEMA coverage lower than that.