Would a flood plain shake you out of an otherwise solid deal?

[Jamie Young]

Hi All,

First time posting, but long time reader here. 

I have an opportunity to buy a fully remodeled 3 bed, 1 bath for $64K. It is tax assessed at $94K. My intention is to hold the property long term as a rental. Avg rental income for the area is $850. Conservatively, i'll assume $750. 

Assuming I come out of pocket for 20% down (12K), the monthly mortgage payment will be approximately $250. Quick application of the 50% rule:  Rental Income of $750 / 2 = $375 - mortgage payment of $250 = $125 left over.

However, as the title stated the home is in a flood plain. While the area hasn't had a "declared flood" since 1985, i'm sure there are occasions where water is bound to cause problems, being located in a flood plain. Unfortunately, I can't say to what extent which is causing hesitation. Financially, I'm aware insurance will be heavier--a friend of mine lives directly across the street shared his insurance is $1500 a year, or $125 / month (twice the average rate for the county).

My questions is, how many of you have experience with owning a rental in a flood plain? Is this worth consideration? Or, am I being overly intimidated / concerned? Are there any learnings anyone with experience would like to share? What am I missing?

Thanks in advance for any insight.