We are looking at a park in Mass. that has good cash flow and all the numbers work. I checked the GIS and it's showing that part of the park is in a floodwaters and the rest is in a FEMA AE 100yr flood plain. Does anyone have experience with having a park in an area like this?
I don't know what you mean by "floodwaters", but AE is certainly a flood zone. If you own a MHP, then you are responsible for maintaining flood insurance on the buildings owned by the MHP. Theoretically, you should not be responsible for providing flood insurance for mobile homes in the park that are paying lot rent, but are owned by someone else. Park owned homes that are pledged as collateral for the loan would require you to maintain flood insurance.
Keep in mind that you can have your title company provide you with a map, and areas with buildings outside the flood zones on the FIRM map are not required to have flood insurance. This may have changed, so double check on that.
So, determine what you need to pay for, how much it will cost, and make sure it comes off the expenses side of the ledger, so that cashflow is correctly accounted for, and price accordingly.
@Zach Scheer Perhaps you meant floodway? @James C. alluded to coverage and responsibility and might want to know your exposure on the park owned homes if there are any. Also just knowing you have exposure out there in the event of a catastrophe .
A few additional comments:
Does the park have a history of flooding? Can you find out if there has ever been a food . This may not help you if no , but if there is a big flood every 5 years gives you perspective.
Do the homes in place have elevation certificates? Talking above my knowledge base here but say the flood area is 1 foot above ground and your homes are all a few feet above ground ( and have elevation certificates) then the risk may not be as great as perceived.
Its definitely great not to be in flood if possible but i come across parks readily where you have to consider this .
The main thing here is to understand your risk and exposure but get a good grasp of the situation and you have to be comfortable with it.
@Zach Scheer The first step is to talk with a good insurance broker to see exactly what the costs are. I've seen flood insurance of SFRs run anywhere from $200/year to thousands.
On an SFR (don't know about mobile homes, or park-owned buildings), if the property has a history of flooding, FEMA will pay 100% of the cost to elevate the building. If it has no history, but is still in a flood zone, they will pay 75%.
No matter how high you elevate it, you cannot gain any more than 4 feet in terms of rating.
Good luck in whatever you do with it!
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