Mobile home parks in a flood zone

[Michinori Kaneko]

Hi, I've been buying more of residential properties in the past, but I saw a mobile home park for sales and it looks interesting so I have been peaking at its financials and some data points on it.  I noticed that this particular park majority of the park is in the flood zone.  For residential rentals, i stay away from flood zone because the flood insurances are very expensive.  I'm wondering if the same concern would be true for mobile home park.  the park is about 50-50 between land lease and home rentals (and few that are rent to own).  I understand for rentals and rent-to-own perhaps the flood zone would cause the insurance premium to go higher, but is there any other reason i should be concerned about park in a flood zone?  THank you in advance. 

[Jack Martin]

@Michinori Kaneko first of all there is a significant difference between a flood zone, a flood plain, and a flood way.  Make sure you are clear with what you really have and if you think the deal could be acquired for an attractive price, it may be worth your time to contact the flood control district that governs the area where the park is located to find out what the flood designation means. If it is simply where a 100 year flood could bring 6 inches of water, that is a completely different issue than the type of flooding caused by Hurricane Katrina. 

One thing to know about mobile homes is that they typically sit about 2 feet above the ground, so the damage that would be caused to a site built home would not necessarily effect a mobile home in the same way, since the water could literally run UNDER the home. You might lose some skirting but at least the home would be dry. Usually, in a case like that, the flood control regulations would require pier footings under the mobile home where the supports are, so any water that could potentially run under the home would not undermine the supports. 

Generally, I would agree with the comments above, but that's one of the cool things about due diligence.  What might cause most investors to run may become the deal of a lifetime:)  Find out what you really have before you punt. 

All the best,

Jack