Flood zone help needed

[Shayla Fletcher]

Can someone explain the risks of purchasing a home in a flood zone? I am working on a condo deal (8 units) that cash flows two thousand dollars after all expenses are paid. I received the appraisal yesterday and it included a warning about potential severe increases in flood insurance costs in the years ahead. I have read many things on the internet but I have yet to find a simple summary of what to expect in the years ahead. Also, I asked my insurance broker and she said she couldn't really tell me about future impacts because it is a federally managed program...please help

[Lynn McGeein]

I have one property in a flood zone and have been researching this as we actually stopped looking in several areas we were very interested in previously due to the lack of clarity on flood insurance rates.  Our flood policy rates have already increased by over 50% due to the $250 surcharge on investment property on top of our regular $450 premium, which also is increasing, and that is for a newer property not in a subsidized area.  When we purchased it several years ago, we were assured by the insurance agent that even if they do change flood insurance rates, it would be by making the old subsidized flood policies pay more, while the unsubsidized ones were already being evaluated correctly so shouldn't see much change.  Clearly, that was not true as the subsidized people are still being subsidized.  Additionally, they only charge owner-occupied a $25 surcharge, not $250, so they are purposely targeting landlords for the increases.   Most areas will show you flood maps including preliminary maps showing potential changes if they've been surveyed recently, so well worth looking into if you are considering purchasing in a flood zone.