Valuing land in a flood plane for wholesale or new construction

5 Replies

Hello BP community! First BP forum post and I could really use your help!

I'm trying to evaluate a potential deal involving a 2.2 acre lot located in a flood plane in Harford County, Md. There is a SFH on the property but it is way past saving and is a complete tear-down job. The house is a 3/1 1200 sq./ft 1940s built. There is a creek that runs about 30 ft from the side and back of the house which divides the property into two parts. The owner is about to go into foreclosure and is willing to sell it for what he owes which is right around $25K. House is currently off market. The property was recently appraised at 80K in its current condition (says the owner, I haven't verified). I've looked at comps and talked to a realtor who said the ARV on the existing property if in good condition would be around 175K but she hasn't seen the property. The schools in the area are very good and the area has a strong rental market.

I realize that the property being in a flood plane will have a negative impact on the market value but it still seems like there would be room for profit if I were to wholesale it given the surrounding houses value in the area. The area is fairly rural and has a mixed bag of different aged and sized homes. Within a mile radius, you can find homes ranging from 100K mobile homes up to 1 million. The closest recent comp to it is a .67 acre lot with a mobile home (tear-down) on the same street but not in a flood plane sold for 85K in 10/2014. Similar to this lot, my property would have septic and well access which should add value.

Does anyone have any advise on how to go about finding an accurate wholesale value for the property? I think that the best use for the lot (because in flood plane and not level) would be to put a small modular or mobile home on it and then sell or rent. Should I reach out to a land surveyor to determine the exact boundaries and build-ability, first? Then find out the costs of clearing the land (tear-down), permits, modular or mobile home construction and ARV for each scenario? Then, subtract all costs plus a profit for builder from ARV to determine potential wholesale price. What net profit % do builders look for?

I apologize for the scatter brained way of writing this post but I'm just typing as it comes to mind. As you can tell I'm not sure where to start. This deal kind of just fell into my lap and I realize it may be too much to handle as a newbie but I don't want to pass it up if there is a decent profit to be made, either.

I would greatly appreciate any advice or list of steps to take when determining the value and profitability of land. Thanks!

Brandon from Beltsville, Md.

Hi Brandon,

1) Obtain a copy of a plat of survey and/or any engineering drawing that might show the limits of the flood hazard area. This may be on file at the building department for the jurisdiction that the property resides in. If there is no survey, then get the current owner to obtain one or obtain it yourself. Maybe you and the current owner can share the expense of the survey.

2) After you have a survey/drawing in hand, visit and talk with the local authority about the property-building department especially. Ask for an opinion as to the potential for building on the property.

3) Visit the zoning authority for the location- find out whether the site will accommodate development and be in compliance with zoning.

After you have done all of this, let me know and I will tell you how to obtain a value on the property.


I really appreciate the reply, Kevin. I'm going to get right on it and get back to you. Thanks again!


Flood Insurance is based on FEMA maps. You can check their website for a map of the area for free- it wont have the detail of a plat. Sometimes FEMA raises a flood plane and the local municipality is slow to revise their information.

Following closely how this works out for you.

@Brandon Hartsell

Be careful.  Besides high flood insurance premiums, some here increased ten fold from $700 to $7,000, and $1,200 to $12,000.  Call an insurance agent and get a quote for flood insurance.

Also if the house is in the "flood way" you can't build anything.

In the flood zone, if allowed to build, some localities have strict standards than the Federal laws, you have to build ABOVE the flood zone by elevation. So for a specific property you need to find out the flood elevation, available from FEMA. If the flood elevation is more than 8 feet, it could be impractical to build. In some flood zone it could 15 or 20 feet meaning that the bottom of the house has to be higher than that. Its more costly to build up and less desirable for buyers and renters to climb two flights of stairs to get to the bottom floor.


I’m working a few properties with this issue;

1st property is a flip,

FEMA came in a few years ago and put a blanket over the whole town, it is up to the individual to prove that your property does not require flood insurance, this is accomplished buy finding and hiring a surveyor who knows how to do a proper evaluation of the property in regards to FEMA, also the surveyor must also know how to push the paper work through to get the certificate that says no flood insurance required, this cost me $300, Worked out great.

2nd property new construction,

Same surveyor shots the elevation then can recommend a fix, meaning what can be done to either bring the land up, develop the house to conform so no flood insurance will be required, would be a good idea to understand rural development loaning rules and other home lending programs on homes in such situations, why you ask? would kind be a kick in the paints to find out the mortgage lenders still might have some restrictions after you do all the work to complete the project.

Details details details then numbers numbers numbers

Good luck


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