Flipper/Rehabber · Spring, TX · Member since 2015 · 99 posts · 62 votes
With the recent floods in Houston, there have been floods in areas that have not been flooded before. I recently came across a house on a golf course in a desirable neighborhood. However, the homes (about 125) all took in water with this last flood. This particular house had a pending sale on it for 225K the day before the floods and of course the buyers backed out. The house had about a foot of water (just below the outlets) and the owners took the appropriate measures to have the house dried out and mold remediation done. This was a 500 hundred year flood are, but the owner did mention that the house received about and inch of water about 10 years ago as well.
Question--Should I consider this house, or will the resale of this house be impossible, regardless of price?
I'm not sure how skittish people are around there about buying properties that have been flooded, but around by me, as long as it's not listed in the 100 year flood zone, it doesn't faze buyers.
If you can get a good deal on the property then it would be worth it. Did they remove the bottom four feet of drywall in all of the rooms to dry out the studs and insulation or just vacuum up the water? If I were you I would require the sellers to do that. There are no garranties that people won't get scared off by that. Good luck to you.
@Undrea King Run away as fast as you can. The flood patterns have changed and homes that never flooded before are now flooding. We've had three 500 year floods in the last year, the most recent being last month. Many of the homes that flooded most recently, like in Meyerland, were rehabbed after the Memorial Day flood last year, and then they flooded again.
Channel 2 had a story about it tonight, and Channel 8 had a great show a couple of weeks ago on their Red, White, and Blue show. Basically, as I understand it, all the new development has eaten up former prairie areas that used to soak up the water. Now it has no place to go except into neighborhoods.
@Undrea King Run away as fast as you can. The flood patterns have changed and homes that never flooded before are now flooding. We've had three 500 year floods in the last year, the most recent being last month. Many of the homes that flooded most recently, like in Meyerland, were rehabbed after the Memorial Day flood last year, and then they flooded again.
Channel 2 had a story about it tonight, and Channel 8 had a great show a couple of weeks ago on their Red, White, and Blue show. Basically, as I understand it, all the new development has eaten up former prairie areas that used to soak up the water. Now it has no place to go except into neighborhoods.
I did not see the tv stories but they make sense. There is too much concrete and not enough green space. Here on the West side, several major roads are still flooded weeks after the rain stopped. It has made the traffic horrendous.
@Undrea King: I would get a deal if possible. We are in the situation that more often flooding may be possible. I actually purchased my home in Galveston after Ike, which took 1 foot of water. I'm one of those purchasers. Hurricane Ike was almost entirely flooding.
It sounds like they abated the flooding issue as far as the house. When I consider Houston investments, I always look to see how close to a Bayou or body of water a house is located. Some of these events that have occurred recently are compounded effects from infrastructure that's worn out, more development pressure, and less greenspace. The lack of flood storage capacity to handle these events, the more likely it will happen in the next major storm event. Are you wholesaling the property? If you can get it cheaper and unload or walk away. I feel it will become more common in Houston as development pressures continue to fill in the greenspace with concrete. I work in the environmental field and see so much and have learned so much about these issues.
Insurance premiums are always a factor if buying/holding - I always use www.floodsmart.gov to gauge the flood risk/cost. If planning to sell, many buyers on the "retail" market will avoid houses that have been flooded and it is disclosed on a Sellers Disclosure (TREC Form).
Absolutely! Some of the best deals I have ever done involved houses no one else wanted because of issues like that, e.g. burnouts. You can buy them dirt cheap and make a nice margin wholesaling them.
I would buy it and try to flip it, but with the backup that you can offer it as a rent to own, seller financed, or lease optioned or even rented out and it should be a cash flow king at that point. Use the fact that it was flooded as a big negotiating point. Flood policies are not really bad, 300-2000 a year, that’s just part of the operating costs. You should still cash flow very well.
I have thought of pursuing these properties specifically. But that just me.
Amongst all the other concerns with flooded properties, my most pragmatic concern would be a lack of sales comps. for the flooded property. Even if you have properties that have sold in the same neighborhood and in the same floodplain, if those houses haven't taken water then they're technically not the same. You have to be careful when comparing the value of houses that have recently flooded to those that haven't flooded recently (or ever).
This is a major problem in the Meyerland area where, to the best of my knowledge, there's only been one property that flooded last year over Memorial Day that was then rehabbed and resold on the MLS. There have been plenty of houses that flooded last year and were rehabbed; some were even resold, just not on the MLS. So, if you weren't directly involved in those sales you wouldn't necessarily have access to that sales data to use for your own purposes...
You should really look at the FEMA flood insurance rate. It varies especially if you're in a high risk zone. It could be anywhere from $300 to $30k a year. The higher-end premium will just wipe out your profit for rental.
I know this thread is covering a two year time span, but it is very informative. The only question is where do I find the FEMA flood insurance rate? I have been looking allover the FEMA site and have yet to find it to get the info on where you go the number of $30K/year for off insurance is a large number to consider. I found This seems excessive, so I want to get get the information from the source would be very helpful.
it basically depends on you, you need to consider some factors before you either sell it or keep it, but if you decided to sell it you can always search for forthomebuyers
I have been in the market to buy a flooded property to BRRR, but the more I look, the more I believe that the flood stigma is still very strong. In fact, look up the HAR listings for the past 8 days in the energy corridor and 8 new completely renovated previously flooded homes are being foreclosed. However, some flippers did manage to sell for a profit, but the renovated homes that didn't sell and whose investor didn't have the money to keep paying interest, are getting foreclosed on. I believe that the renovated home foreclosure epidemic will likely only get worse and probably bottom out next year.
And the previous owners of those recently foreclosed renovated homes were two institutional investors who bought over 200+ homes after Harvey. If the rest of their inventory also gets foreclosures, it will be a tough market to be selling a flooded home, even if its immaculate.
I am still putting in offers for flooded homes, and you should too, but the best exit strategy is to buy them as cash flowing rentals and IF they don't flood after 8 years, sell them to home owners, otherwise not worth the risk.