All Forum Posts by: Kevin Coggins

@Jesal Shah From the analysis I've done, in order to get anywhere near a decent cash flow, you need to be getting at least 1.5% of the ARV. The 1% rule just doesn't work here, especially when property taxes range between 2.6-3.7% depending on the area. And 1.5% is basically the minimum, if you want any sort of cushion you really need to be looking for 2%.

@Nikolas Ferreira How would I do that? I'm realistically probably a few months from being where I need to be to actually buy...so I basically just analyze a deal and say "oh cool if only I could buy this" haha. Unless I'm doing something wrong, it seems like 1% rule isn't really applicable (in TX at least), from what I've looked at it seems like 1.5%+ or 2% for a deal to make sense.

Agree with @Nikolas Ferreira, I've come across several properties that I'd be interested in, but just not in a position to purchase just yet. Seems like there's also some great deals that go VERY quick, just gotta be ready/looking out for those.

@Ernest D. This might not answer your exact question, but there was plenty of valuable information that was given to me in a similar situation.

https://www.biggerpockets.com/forums/756/topics/395159-valuing-investments-in-a-flood-plain

@Account Closed - Thanks for the tip, I will look into contacting those agencies. I've been looking at this property for awhile - seems like if I want to go this route there is more to look into.

@JP Palella - We recently purchased our first home in that area - 77388 I know is a Spring zip code that's zoned to Klein ISD. There are houses in that price range you mentioned above, although alot of the houses are older. There was also a decent amount of flooding in various areas of Spring earlier this year, so that may be another consideration (although areas all over Houston flooded).

Good point,  I did spot check a few that sold and none happened to be in the 100 yr flood plain (there was in the 500 yr). Seems like really it just varies by area and there really isn't any rule to potentially follow in the scenario. You've given me some ideas to try to back into a number that could be useful in evaluations, as long as I can find some comps in the 100 yr floodplain (or really anything that's sold).

Not sure who you're planning to use, but if you have a Costco membership we went through Ameriprise and got coverage for $950. I got no clue about FHA loans though, I know ours was paid by mortgage company, so technically it came through our closing costs. I'd assume there's a way to work around to get the insurance included in the mortgage.

Well, so what if House A on one street is the exact same as House B, except that House A is in the 100 year floodplain. It could be that neither have ever actually flooded, or that both could potentially flood. House B based on comps would go for about $200k, I'm just wondering is there is any sort of formula to go off of to get a value for House A. Also, if the goal currently is short term - the amount of  for insurance wouldn't be a major issue since I wouldn't buy/hold the property.

What I'm actually looking at is two residential lots of land, so I can take the risk and potentially lose a few thousand, so it's not like I'm buying a house for $200k. This is my first potential investment and houses have been selling in the area (500 yr floodplain vs 100) and land has sold as well (near, if not in the floodplain).

So when analyzing potential investments in the flood plain, do you just factor in the cost of the flood insurance? Assuming two properties are in the same part of town, but one happens to be in the 100 yr floodplain and the other isn't in any floodplain.

Also, would you value differently if it's land instead of a home?

I'm curious, because it seems like you'd want to factor in the cost of flood insurance, in addition to also factoring in that the property will flood every X years so you'd need to save for the deductible that's inevitable. I know that there is always the chance you can protest the flood plain status or make improvements too.

Or do you just avoid flood plains altogether? That was my initial thought, but trying to get a feel from others with some experience.

Thanks!