Investing in Natural Disaster Areas (Flood / Hurricane)

[Jordan Rahman]

It's a SFR in Sand Springs, OK. It was affected by the big flood here recently (May/June in OK,AR). House has been gutted, had remediation, and the owner has contacted me about purchasing it. The majority of the neighborhood was affected, and this would be 1 of the 1st renovations for that neighborhood. FEMA map is effective 8/2009 and shows property has 0.2% chance of annual flood.

3 bed/1.75 baths/1825sf
Purchase price: $50,000
Estimated Renovations: $45,000
ARV(before flood): $150,000

I AM nervous to rebuild. The house was very well constructed and taken care of with many recent updates (electrical is in working order, comm system from shed to house, the lot from street to backyard is about 300 feet, newer huge HVAC unit). All systems are operational except circuits/plates below 27". Should I negotiate a better price to provide a better cushion for myself on the back-end in case the holding period is a bit longer?  Houses were selling in that neighborhood with less than 45 DOM pre-flood.

I'm nervous because the flood JUST happened and the damage is visible throughout the neighborhood. I think after renovations, the house could be worth MORE than $153k, but just not sure how it will be viewed by prospective buyers. Also, even though flood insurance is not currently required, I would still factor it in as a precaution since Mother Nature has a peculiar sense of humor.