Advice on buying in a flood zone

[Susan Knight]

Hello Everyone,

I recently ran into a house in my area that was damaged from Hurricane Mathew. The house is a 3/2 with a unattached 2 car garage, which sits a little lower than the house. The house has roof damage which is protected for now but needs a new roof. the garage has visible 2.5 foot water marks on the walls from flooding. Its now considered a flood zone. The house is very appealing, has a large yard, nice room storage shed and is priced about 30,000 less than the comps. It it will need about 20,000 in rehab IMO. and may be less, since it looks like the house it's self wasn't involved in the flooding, but I am sure it was pretty close to the bottom floor, if not def flooding the crawl space. I have not done my due diligence since I am unsure if I should bother, but it looks like it can be a good investment, but I worry that it will happen again. and yet it might not happen again for years. I live in SC, and Mathew shocked many of us with flooding, in areas it never flooded before. What are your ideas? As I write, I know it's probably not a good idea, but its very tempting. Thanks in advance.

Susan

Cost: $100,000

Rehab: $20,000 maybe less

AVR $139,000

COC ROI 8.06%

Purchase Cap Rate 7.64% not as high as I would like it to be

Pro-Forma Cap Rate 5.49%

Estimated rental $850.00/month

monthly cash flow 50% rule only $65.75

Total cash flow: $277.18