All Forum Posts by: Robert Murphy

Hi @Yesenia Martinez, thanks for sending your address. This lets me help you. As I was shopping, I was quoting at the maximum of the NFIP guidelines, which is $250,000. If you are getting a federally backed loan to purchase this property, your lender will require you to get a flood insurance policy. Otherwise, you can't get the loan. This is a federal law if the property is in what the government considers higher-risk, usually identified with as an AE flood zone, but also can be VE if close to the ocean or some communities off the great lakes. The only way the FEDS have to enforce compliance on purchasing flood insurance is if the loan is federally backed. The Government policy for a 1 - 4 unit residential structure will only allow the Maximum of $250,000. Since the NFIP sets the standard for flood insurance (and has for 50 years), your lender will only require you to cover at this maximum. Note that $250,000 should be a lot but is not for the possible damage to the structure. The average flood claim comes out between $44,401 - $180,000 in 2021, but this was before inflation really set in, so it might be higher. Plus, due to the magnitude of flooding, the cost goes up (supply-demand stuff).

Sorry I get really Nerdy about this stuff. All that to say I did quotes for your property at the maximum required by most lenders of $250,000.

Here is the breakdown to show you the vast difference and why it is really important to work with a flood insurance expert to get options. 

All the quotes below have the building coverage of $250,000 ($50,000 contents) and a $5,000 deductible 

Option 1 - The government option (also referred to as NFIP or FEMA)

Annual premium of $9,191 (Wow and Ouch) 

Option 2 - My most competitive Lloyd's of London flood insurance option

Annual premium of $1,345.45 (very good) 

Option 3 - My second best (sometimes) option Lloyd's of London flood insurance

Annual premium of $2,976.73 (still good, well kinda ok compared to the NFIP) 

We, of course, shopped for other options but not of them were noteworthy.

One thing to know is if the property has had a prior flood loss, the private flood markets might decline to offer coverage, leaving your only option the government offering. 

Your flood nerd

@Kevin Manafi , solid advice. @Yesenia Martinez, The only thing I want to add is since 2012, there is and has been a growing flood insurance market google search "Lloyd's of London flood insurance" or "private flood insurance," and you will find how competitive this private flood insurance markets really is sometimes 50% less than the NFIP or FEMA or government option (which is the same but people refer to it as NFIP or FEMA). So the NFIP or government option has had a lock on the U.S. flood insurance market, and as with any monopoly their behavior got a bit out of hand the administration signed it into law (Bridget Waters). We Flood nerds call it BW12, which opened up the flood market to private companies. Now it gets a bit confusing since your Farmers, State Farm, Geico or Progress, or any other name are private companies, and if you get a policy with their logo on it it is really coming to form the government policy, so they are not truly a what I am referring to as private flood insurance. So @Kevin Manafi you are 100% correct if you use one of the major insurance providers to get a quote you will get the government option and your quotes will be the same. If you use someone that has access to the 40+ different options now you will get a gage on the full flood insurance market. Again you can ask @John Mocker or I to help you, but I don't really know @John Mocker offerings. I see him post a lot on flood insurance and his advice is solid, so I assume he has options. Might be worth doing the google search "p and then if you want to work with someone on this BP network maybe search the network for those that help with flood insurance.

Investopedia has a great article on flood insurance however it mentions Geico, USAA, and Assurant which are just resellers of the NFIP policy. 

Your flood nerd

 

We write a lot in that area. Both private and NFIP. @John Mocker or I can help you. 

@Sara Lightsey Yes, if you are looking to get a LOMA (aka rezone), then you would need to get the land surveyed @Barrett Bridgewater, and his company is experts at accomplishing this. The BFE on your property looks around 478.7, which is how high the flood waters will rise. I used a tool to guess where the land is at https://whatismyelevation.com/ , and putting in the address, I get the number 476. So if that is the number for the land and the BFE is 478.7 - 476, the land is considered a -2.7, meaning if you were to build the structure without any elevation (built on post) and you would need to build at least 2 ft higher then the 478.7. we recommend at least 4 feet, so this could mean that the house would need to be 6 or 7 feet off the land. The goal is if/when it floods, the water would simply go under the building and not damage any of the living areas. Your flood nerd

@Sara Lightsey The alternative is to bring in dirt or move the dirt to mount elevation if your land doesn't naturally have higher ground.  Is to build an elevated home above the Base Flood Elevation (BFE). 

If you want, you can send me the flood map that shows the number of the BFE and I can look at it for you. 

If you build higher than the BFE, you could reduce your flood insurance cost. 

If the land has sections that are in a lower-risk flood zone (usually identified with an X flood zone). If you build here your lender won't require flood coverage. 

If the parcel doesn't have any lower-risk flood zone on it (AKA higher elevation). Your lender will likely require an under-construction flood policy. And you will need an under-construction Elevation Certificate (EC) that your builder or surveyor can fill in based on drawings, and then you have a year to build. 

You will then need to get a finished construction EC that will be based on the actual structure. 

@Barrett Bridgewater is an expert in getting people LOMA that removes the requirement to get flood insurance and gives such solid advice. I want to echo that it is a good thing that there is an AE (established elevation) on the flood zone, meaning that the government has already done studies typographic and maybe hydro study, so... if you can get ahold of these documents, you might not need to pay for your survey to be done. 

My recommendation would be to contact your region FEMA representative.

https://www.fema.gov/about/org...

Go to which region (state). And then click on contact. We, Flood Nerds, have always found them quite helpful. 

You can also contact your local building code department and ask, "who is the Flood Plain manager" this person should have access to and get you the maps and studies you could use to plan your build. Note: some local government sites have these people listed on them. Good luck. Your flood nerd. 

@Jordan White wow you have some solid questions. Although I don't know the exact answers to the responsibility. I do know that mobile homes in flood plains is a difficult thing to navigate. The issue with most flooding events and Mobile homes is they turn into a boat if there is enough water motion and if the setting of the structure isn't fastened to the land in accordance to the local ordinance guidelines and manufacturing mounting guidelines. Your goal is to make sure the home doesn't float away I think if it does then you might be liable. As for awareness of your renters, I would assume if you had a lawyer work up a disclosure (similar to the one that speaks about lead paint) and get renters to sign it. As well as some kind of landlords strongly suggest renters insurance that included flood insurance and if the renter decides to not purchase this coverage they are solely responsible for their own contents. 

I think with any business there is always a liability I just think all we can do is our best due diligence to ensure that the property is as safe as we can make it (fire alarms, CO monitors, and a strong recommendation to get their own coverage) make sure the home is mounted in law and if you can go a bit farther then the requirements (if it is a little slack) and document that what you did and what the intent of the steps you took and the probable outcome. Good Luck. Your flood nerd

I read an interesting article the other day about negativity versus positivity inside relationships. The article specifically mentioned a husband/wife relationship, but as I read and really started thinking, I saw a very applicable lesson for my team and even my customers. I thought that you, as a small business owner like me, could get some value from the information as well.

The article suggested that for every negative interaction inside a marriage, there need to be 5 positive ones. Studies conducted showed that when there is an equal balance of negative and positive interactions, the relationship is doomed for failure. The same study conducted additional research also showing that staff groups with positive to negative interaction ratios greater than 3 to 1 are significantly more productive than groups with less positive interactions.

Our relationships with our customers are affected by this as well. Think about your decision-making process when shopping around, let's say, for a new car - the more positive interactions you have with one dealership, the more likely it is that the relationship will continue and flourish. Alternatively, if you have a negative experience, that relationship is also doomed like the marriage I mentioned earlier, and you probably won't be driving off their lot in a shiny new ride.

So what does this mean for you and me?

Though we may already be doing a good job, there is always room for improvement in our daily interactions with others. We need to focus on increasing the number of positive interactions we have and reducing our negative interactions.

We need to engage each other with more smiles, kind words, encouragement, gratitude, meaningful conversations, honest dialogues, and sincere positive interactions. From our customers to staff to families, our goal should be to interact more positively. If we make these positive interactions a part of our organizational process and individual habits they are more likely to happen and stick. The key is to act with intention.

The article went on to say that all of this doesn't mean we should never have negative interactions. We are human after all, and finding a happy balance is necessary for success over time. The same studies showed that if staff groups experience a 13 to 1 ratio of positive to negative interactions, the group will actually be less productive and less effective. Too much positivity can imply that no one is willing to confront the real problems and challenges they're facing. As you've probably learned over the years, ignoring problems doesn't work. Negative interactions are necessary so long as they occur much less frequently than positive interactions.

I found all of this very interesting and really wanted to share it with you - just another way I try to increase my positive interactions with friends of mine like you in our community. J

I hope you got some value out of this message. Please feel free to forward it to your staff, friends, or other small business owners who could benefit from it as well.

To Your Success, Your flood nerd

@Barrett Bridgewater <--------- is wicked smart and knows his stuff if they can get you the LOMA you will have the option to get coverage or not if your lender recognizes it (and most do). Most people are only insuring because of the lender requirements - mother nature could care less if the property is in a high-risk flood zone or not, or if the lender requires coverage or not if the structure sits in a flood-prone area or we have some horrifying weather event (which we are seeing more and more) the fundamental purpose of any insurance is to have it when and if you need it. Much better then wishing you had it and not having it. But the LOMA as Mr. Bridgewater (awsome name) mentioned at least gives you an option to choose if you will insure or not. Your flood nerd 

Hi @Josh Green I would echo what both those fantastic agents have already mentioned. Florida seems to be a hard market for some private flood compies and others not so much. I believe it all has to be if the underwriters (UW) are profitable or not (Aka not undercharging and overpaying on claims) which was the strategy in my opinion of short-sighted UW. We have been fortunate to have some sold profitable UW in our offering so they are still offering competitive rates and we are writing a lot of business in FL. In addition, we are seeing some areas of FL get more competitive rates on the government policy (NFIP). As for fast well, that seems to be what the whole industry of insurance is being required to do. Best case we can get a quote in 9 min to 30 min worst we can get by EOD the same day of the request there are of course the more difficult properties to get a good premium on. I have been tracking the market for many years and we tend to find that it seems on average if you have a single-family home (sometimes duplexes and 4 plexes follow the same principle) and you are covering at the maximum required by the federal law $250,000 or data shows that we usually can find a UW to pick up the risk for anywhere between $500 - $1500. Which is really a great price. The NFIP 2.0 is for some properties coming in way low where the rest of the market where the private markets don't want to touch a property (I'm guessing) because all the private market premiums are coming in at $5K then the NFIP is coming in at $698 so of course, we offer the NFIP since that is the best price. You need to find a broker like @John Mocker or @Jason Bott both of who I see offer competitive rates to what we get and both who really know what and where to place the risk to save the client money. So the best is to look for a flood insurance expert that will shop both the government and the private markets for flood insurance as for property well most local agents if you want some referrals I am sure someone on this thread can offer up suggestions of property markets for flood you can't go wrong with any one on this thread. 

Your flood nerd Robert

hello, @Alex Flood although I am not the seasoned investor you were requesting to respond I have been around many investments just not jumped in as an investor yet. I think you are on the right train of thought as far as loan vs. paying out of pocket. I can understand your parent's reluctance to borrow they likely worked really hard very hard to pay off the home and in their senior years they likely don't want to get back in dept and that is really a generational dream. I am assuming you are a younger man and being so you have a different generational belief about the realities of wealth in this new age. It sounds like your parents want to leave you and your siblings something (mentions capital gains) which again is the generational dream. Unfortunately, your parents should have been making updates to their home over the many years it was paid off so it wasn't/is not in major need of renovation. Personally, if I was in your situation I would try to convince my parents of their ultimate goal to leave a legacy family gift to their generational offspring and my guess is that they are likely going to get much better loan terms due to their age and likely financial stability all that to say I think it is a much wiser decision to get the loan (it's rather small compared to the value of the home) get the rehab done as quickly as you can so you can start the leverage (basically making more money then the loan payment on the loan of 90K might be 1K-2K and if your rent is 3.5K then you are making overage aka Leveraging) and if you and them think of it as a family project then your parents won't have to think that they are going it all alone navigating this new adventure. In short, I would encourage them to get the loan and work on a time schedule to get the rehab done in a few months top. You can be the project manager and maybe they can pay you a bit to project manage. Good luck! Your flood nerd.