Valuing investments in a flood plain

[Kevin Coggins]

So when analyzing potential investments in the flood plain, do you just factor in the cost of the flood insurance? Assuming two properties are in the same part of town, but one happens to be in the 100 yr floodplain and the other isn't in any floodplain.

Also, would you value differently if it's land instead of a home?

I'm curious, because it seems like you'd want to factor in the cost of flood insurance, in addition to also factoring in that the property will flood every X years so you'd need to save for the deductible that's inevitable. I know that there is always the chance you can protest the flood plain status or make improvements too.

Or do you just avoid flood plains altogether? That was my initial thought, but trying to get a feel from others with some experience.

Thanks!

[Sam Craven]

Dont make a habit of buying rentals in flood zones, but if the numbers work....and you arent planning to hold the property forever.  I would give it a shot.  I have one rental in a flood area, was not affected by the recent flooding, cash flows like crazy and im currently sitting on a great deal of equity.

I have found that flood zones rarely effect rental rates unless it was affected by a newsworthy flood event.

However flood zones always effect the value of the house.  Check out www.harriscountyfemt.org for the flood maps.  A house across the street not in the flood way will be worth more, no set rule for how much more.  Depends on the cost of flood insurance and how that affects their payment.