All Forum Posts by: Sante R.

Your friend should do a few things.

First, he should look at the flood map and find out whether his property is right in the middle of a 30-year flood zone or somewhere on the periphery of a 100-year flood zone. That will impact flood insurance costs, both short- and long-term. It sounds like he's hearing "flood plain" as a blanket statement, and it's not.

Second, he should find out the history of flood insurance at the property. The redrawn flood maps include more property than the old ones because, in order to pull the NFIP out of the red, more homeowners with low risk need to buy policies. If the property is in one of these newly created areas, the real cost of the coverage will be pretty low. Usually.

Third, he should find an insurance agent who has been staying abreast of the evolution of flood insurance policy. Any agent can rate a risk, but Biggert-Waters and the Flood Insurance Affordability Act have made significant public policy changes and also created a certain degree of uncertainty. Not every agent can walk your friend - or a potential buyer - through the misinformation and doublespeak to get down to brass tacks.

Fourth, he should get an Elevation Certificate done. This establishes the property's elevation relative to flood risk, and it can mitigate premiums significantly. At the very least, getting an Elevation Certificate allows him to present the risk categorically to a buyer. At this point, flood insurance rates are scary, and unknowns will likely be interpreted as a worst-case scenario.

If the bank wants a premium and to dump a problem then move on to another property. Tell the listing broker to tell the asset manager that you are not dealing with a former holdover home owner tenant unless the price is really cheap.

The bank might just write off a bigger loss than wanting to deal with fighting a holdover tenant. If you are buying and holding you would just need to factor in a long time of no cash flow coming in. The other part is you can't just like a short sale accurately assess what kind of damage the outgoing tenant will do to a property if they are not out yet when buying.

Check your state laws for what can be done in a situation like this, and ask local investors/agents for input on how to handle it - maybe a solution like cash for keys (where you talk the owner into moving out for $1000 or so)