I am considering a property to rehab and flip. I just learned that it is in a flood zone, though there has never been any water damage. For the pros in this forum group, do you buy, fix, and flip a Flood Zone property? Or is this a deal breaker?
I am not sure I understadn your question. Is this something I should ask the broker? I did talk to one of the neighbors who said that theey never experienced any flooding and that the brook was rebuild about 40 years ago.
There are flood plain maps that show what type of flood plain the house is in. It could be a 100 yr flood plain. We have a few rentals in flood plains. It usually means there’s a creek behind them. If you have financing with a bank, they’re going to require you to get flood insurance. You get that thru the gov’t. Is it an issue? Maybe for some people, but there are plenty of people living in houses with creeks behind them.
For what it’s worth, all of the houses down at the bottom of the hill in my neighborhood got put in a flood zone a few years ago. The reason? Some guy downstream threw a ton of trash in the stream and clogged it up. It backed up and flooded most of the homes down there. So you can never really be sure nothing’s going to happen.
I wouldn’t make it a deal breaker, as long as you can get insurance on the property. I know one guy who has had 2 flood claims on a property and he still has coverage, and he made a profit in each claim - note this is rental property.
And search for your property address, and see what type of flood plain it is in…
THEN contact your local agent and see what they charge for flood insurance. Note flood insurance is sold through independent agents, but it is a seperate policy via the government; it is not part of a standard homeowners insurance policy.
Also, if your agent does not carry flood insurance, you can find an agent that does via:
Flood plains are rated by how often they are supposed to flood. 100 year flood plains flood once every 100 years. It’s not a big deal. Every five years is pretty frequent and insurance likely isn’t available for that. You might even be able to put a berm up along the creek to make it very unlikely that it will happen, but you need to be careful with this because messing with waterways and drainage will get you in really hot water.
MotivatedCEO, he’s looking to flip. My answer is to skip it unless it is a very desireable house for some other reason. If you do buy it I’d plug in double or triple the carrying costs into the equation to account for a longer time to find a buyer, and maybe cut the sell price 10-20%. If you can still make a decent margin then maybe it’s not a bad deal.