Help minamizing flood insurance cost

6 Replies

hello everyone, 

I’m at my final phase of closing on my first property(multiplex). After doing my analysis, crunching number, and due diligence I get hit with flood insurance which has been on heard of for my location. I’ve asked around and a lot of property even close to the water don’t seem to have it but since the appraiser said that I need it the mortagage company requires it. 

That being said the extra insurance will be hurting my cash flow. Is there anything that I can do to remedy the hit of having to get flood insurance? Also i was told since it’s a multiplex I have to pay the upper premium?

Thank you in advance for your advise. 

Gilbert,

Up until recently, 99% of flood insurance was written through the National Flood Insurance Program (NFIP).  The rates are standardized and broke up by type of building (residential, commercial, condo), flood zone, elevation, and other factors.  If your property is more than 4 families it will go on the General Form.   You can insure up to $500,000 coverage for the building.   Your Mortgage company will generally require that you show coverage up to the amount of the loan. 

Some things you can do to lessen the cost:

- there are some Non NFIP programs (private flood insurance).  Have your agent check them as well

- check to see if there is a survey of the property to determine the elevation of the lowest floor.  If not, check to

   see if there are any potential savings by doing a survey (approx. $700)

- Find out if the property was in a lesser flood zone and was changed recently.   There may by some

  grandfathering in of prior rate that you can take advantage of

- if you have to take the NFIP policy, check on all deductibles.  The savings on the higher deductibles may help

Hope this was helpful

I always try to stay away from purchasing properties in areas that need flood insurance.  If it is uncommon for the area like you say, the next step would be to determine if it is this specific property that requires flood insurance or if your lender requires it for every property they lend on.

Thank you for the response. From what I’ve found out it’s is something the FEMA has came up with within recent months. 

Originally posted by @Aaron K. :

I always try to stay away from purchasing properties in areas that need flood insurance.  If it is uncommon for the area like you say, the next step would be to determine if it is this specific property that requires flood insurance or if your lender requires it for every property they lend on.

John thanks for the input. I just found out I can’t get grandfathered in but I will be looking into the other options. 


Originally posted by @John Mocker :

Gilbert,

Up until recently, 99% of flood insurance was written through the National Flood Insurance Program (NFIP).  The rates are standardized and broke up by type of building (residential, commercial, condo), flood zone, elevation, and other factors.  If your property is more than 4 families it will go on the General Form.   You can insure up to $500,000 coverage for the building.   Your Mortgage company will generally require that you show coverage up to the amount of the loan. 

Some things you can do to lessen the cost:

- there are some Non NFIP programs (private flood insurance).  Have your agent check them as well

- check to see if there is a survey of the property to determine the elevation of the lowest floor.  If not, check to

   see if there are any potential savings by doing a survey (approx. $700)

- Find out if the property was in a lesser flood zone and was changed recently.   There may by some

  grandfathering in of prior rate that you can take advantage of

- if you have to take the NFIP policy, check on all deductibles.  The savings on the higher deductibles may help

Hope this was helpful

@Gilbert Lugo I hope I am not coming into this too late. I would suggest that you look at a private flood market. If you work with a knowledgeable insurance agent that has more then 700 flood policies you will see that there are a lot of options. Let me know if you need ideas on who to contact. 

I till haven’t committed to any agency so yes any of your recommendation would be much appreciated. 


Originally posted by @Robert Murphy :

@Gilbert Lugo I hope I am not coming into this too late. I would suggest that you look at a private flood market. If you work with a knowledgeable insurance agent that has more then 700 flood policies you will see that there are a lot of options. Let me know if you need ideas on who to contact. 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here