Multi-use Property in Flood Zone

3 Replies

A property recently came to the market. It has a store front on the first floor and 2 apartments on the top 2 floors. The property is considered flood zone because of an under group creek that runs about a block away. Would the owner and the renter of the store space have to have flood insurance?

@Jacob Plocinski - I would just call your insurance agent and have them look up the floodplain. Then talk with your lender and see if they would require it. My guess is you as the building owner would be required by the lender to have flood insurance for the property. 

I stay away from stuff like that unless I get it DIRT CHEAP otherwise I look to purchase other properties. You have to look at risk/reward ratio when buying properties for investment. What does it give me for upside? What are the risks involved? What are the chances of being successful, how long will it take, what is the exit plan?

Jacob,

There is no requirement that the owner or tenant purchase flood insurance.  There is a requirement that, if the owner gets a mortgage and it is in an A or V flood zone, the lender must require flood insurance.  If they do not get a mortgage, they can chose not to insure the Flood risk.   Its possible that, if the store tenant gets a loan secured by their business property, a lender may require the flood insurance.  I have not seen that often.

There are several, programs independent of FEMA that are providing Flood coverage. If acceptable to the owners Bank/Mortgage company they may provide a cheaper policy in this situation.