All Forum Posts by: Barrett Bridgewater

Hey @Rene D. , the first step is to get an elevation survey. The most prevalent is getting an Elevation Certificate.  Most surveying companies can do this.  It is possible the current owner already has one.

The next step is to compare the elevations of the structure against the elevation of the 100-year flood level.  If the structure is above the flood level... then you qualify for removal.  

The next step is to submit a FEMA petition. Once FEMA reviews and approves... you will have a Letter of Map Amendment (LOMA) that you can provide to your lender. Your lender will then remove their flood requirement.

It's an orderly process.  Sometimes the key difference is the engineering firm you get to work on it.  

Using the FEMA Flood Map is intuitive. Your lenders (who mandate flood insurance in flood zones) contract with 3rd parties who provide them "flood zone determinations." Guess what they use? Yep, the FEMA Flood Map.

However, we have proven a lot of inaccuracies on the FEMA Flood Map. Their maps are developed at a high level, painting flood zones across vast areas. So if we zoom in... we find the inaccuracies happen at the property level.

That means... there a hundreds of thousands of properties out there that could qualify for removal from the high-risk zones (which removes lender mandate). 

If you can find one of these properties you can flip the flood zone designation (we call this a "Flood Zone Flip").  That increases the property value.  And if you can do this before closing... that's extra cash in your hand at the closing table.

@Obi Nwapa

@Eliott Elias

@Andrew Thomas Vedderundefined

I know this is an 8-year old thread, but wanted to shed some light.

FEMA looks at the ground elevations. If the ground is above the flood level, then your building qualifies to be removed from the High-Risk and into the Low-Risk (X-Zone). THAT removes any lender requirements for flood insurance.  Your lender drops their mandates.  

You will have won the freedom to decide if you want flood insurance, how much coverage, etc (rather than what the lender requires).

NFIP under their new system (Risk Rating 2.0) evaluates flood risk on a whole lot more factors other than just elevation.  This has caused a great reshuffling across the nation in premium amounts.  Some actually got reductions.  Overall though, we are seeing massive premium increases.

So in your due diligence... investigate first if the buildings might qualify for a removal out of the high-risk flood zone.  If so, you just gained a lot of property value the current owners didn't know was possible.  

@Brian Walsh @Franklin Romine @Justin Owens @Michael R. @Lynn McGeein @Tom Brooks

Have you looked into the possibility of doing a "Flood Zone Flip"  Thats what I call it anyway.  

It is the concept of evaluating the elevations of the building to determine if it sits above the flood level.  If so, then it qualifies to have the flood designation removed.  That would remove any lender requirements for flood insurance.  

When you can get that done before closing... it increases your property value + your proceeds at the closing table.

For sellers... they can do the same thing.  Remove the flood zone prior to going to market.  Gives a massive property value increase.

Have you looked into the underlying assumption that the building should be considered in the flood zone?  I am sure geographically it might be.  But, the elevations might demonstrate that the building sits above the flood level.

If so, it could qualify to have the flood zone designation removed.  That removes any lender requirements for flood insurance.  

Could be a huge win if so.  Most people don't know that is an option.

One of the first things to look into in Florida is the option of removing the flood zone designation off the property.

Lenders have been increasing their requirements for flood.  My insurance friends are having to ladder different carriers together into a policy just to suffice the lender requirements.  And meet compliance.

Well, if it can be proven to FEMA that the structure sits above the floodplain, then it qualifies to have the Flood Zone designation removed. That will result in removing the lender requirements too.

That evaluation can be done before you make an offer.  And removals achieved before closing.

Just saw an economists report today that confirms on macro scale everything my clients have been explaining... cost of real estate is spiking up.  This is terrible timing considering costs of borrowing is up too.

In the insurance markets we know we have been in a "hard market" for the last 3-4 years.  That means insurance carriers are not competing.  They are all increasing their premiums.  And in some markets like FL we have seen carriers exit the market altogether.

I am also seeing lenders increase their insurance requirements.  They want investors to cover the potential for business interruption and also cover the higher replacement cost estimates.  So not only is cost of coverage increasing... the amount of coverage required is increasing.

Thankfully, our flood zone engineering team works to find relief for investors (in flood). We've been successful in removing lender requirements. We've never been more valuable to insurance brokers, CRE brokers, and investors.

So the question I wanted to pose here is... how are you finding relief?  Where are you finding it?  What resources are you having to pull from?

@Carlos Ptriawan too bad the lender scared you off the Flood Zone property so quickly.  Sometimes Flood Zone properties can be the BEST investment... that is... if the Flood Zone designation can be removed.  

Owners of flood zone properties generally devalue that asset.  No one wants them.  However, what those owners don't know (that you could research as a buyer) is the building was built above the floodplain and qualifies to have the flood zone designation removed.  

Imagine how much hidden property value you could uncover.

One thing to add to this thread:  our recommendation is to first get your permits.  Ensure the permits include the use of dirt/fill to elevate the area you are building on.  Make sure that elevation point will be above the flood level.

Then pour your slab or start your foundation. At that point petition FEMA for the removal.

Option 2 is to bring in dirt/fill. Then petition FEMA to remove the land. Cons: that is a much longer process and FEMA requires more studies be done. It is not always successful. Pros: if you have a large project (like multifamily, or hotel, or something) then you will have removed any local ordinances that force you to use more costly materials when building in a flood zone.

@Ryan Seib seems you have some experience dealing with Flood Zone issues already?  Most of the time no actual physical changes are needed.  We normally find that the buildings were built above the flood zone already.  So it is generally less about when it was surveyed and more about who performed it.  Not every survey comes out exactly the same.  It just generally requires a surveyor who knows how to utilize the best reference points to maximize the elevations gathered, plus an engineer who knows what they are looking for.  

There are a few situations where small physical changes can qualify the building for removal (like adding a couple bags of mulch in a low spot against the foundation wall).  

If the building truly is below the flood level though, then there are no physical changes that we can recommend for improving the elevation. Raising the floor level only provides better ratings for flood insurance; that will not work with a FEMA flood zone removal. I did have a client demolish, bring in fill/dirt, and rebuild above the flood level. But that making sense financially is rare.