Flipping a house in FEMA flood zone?

Question

Who's got experience flipping a house in a FEMA flood zone with known history of flooding?

Did it cause issues when reselling them home?  Lowered sales price? Increased DOM?

Did you put it in the realtor remarks section or when did you disclose?

Did you do "extra" things during the flip to address it?

Note: I'm not looking to be convinced to not do it, I'm interested in hearing from those who have fixed and flipped.

Thank you!

Luka Milicevic · Answer

@Thuy Pham-Satrappe

It very much depends.

For example, in my market of Nashville we had a BAD BAD BAD flood in 2010. After that you couldn't give a house away if it was in a flood zone.

Now, almost a decade later it has subsided. FEMA has moved their maps around. People are more willing to purchase homes in flood zones, however; if the lender requires flood insurance then there is definitely going to be a price reduction in the final sale.

Greg Dickerson · Answer

Yes I have but after the house was raised up out of the flood zone.

You definitely need to get insurance quotes for Flood as that make a huge difference for your and buyer in their monthly payment.

Wes Johnson · Answer

@Thuy Pham-Satrappe

My first property was in a flood zone as most properties in my home state of Louisiana are. There's no way around it where I'm from.

Aside from handling any apparent drainage issues there's really nothing additional you have to consider other than additional insurance costs. You'll want to maintain flood insurance from the NFIP. Obviously your end buyer will have to do the same.

Wyatt Cutler Tiffany · Answer

@Thuy Pham-Satrappe a strategy I have used to sell my personal flips in a flood zone is offer to pay the first 2 years of flood zone insurance for the new buyer.

I am currently going through this with my personal residence that we flipped and the subsequent lot attached to the property.

Patrick Snyder · Answer

And in my experience, some areas have really been targeted by insurance companies, which have raised rates.  If it's me, I get a couple of quotes to make sure the premium isn't something outrageous that would prevent you from selling down the road.

Wyatt Cutler Tiffany · Answer

@Thuy Pham-Satrappe I usually dont offer anything up front. If you do and the potential buyer is represented by a good agent they will inevitably ask for more (give an inch and they will take a mile). Also I found that when the potential buyer has walked the house and is willing to make an offer you have more bargaining power to then start negotiating. Now that being said that usually only works when you have created a desirable flip and you're already priced below some of the other houses in the neighborhood (if the other houses are not in a floodzone like my current house). What gets people excited is the lower price point in whatever neighborhood your in. You can only make the returns your looking for though if you have bought the property right.

I dont mean to drag on, and I'm sure other people on this site have had success doing things in a different way this is just what I have found to work in my market. Its hard for me to speak on the CA market since I have never done any work there. Flood zone houses are tricky and can be a riskier investment but if bought and handled correctly they can definitely lead to a good return.

Thuy Pham-Satrappe · Answer

@Wyatt Cutler Tiffany thank you for sharing! I was thinking that could be a concession if we have hesitation from the buyer, or do you offer it upfront?

Thuy Pham-Satrappe · Answer

@Patrick Snyder great idea! Best to have it in my arsenal so buyers have the facts and aren't paralyzed by fear

Thuy Pham-Satrappe · Answer

@Greg Dickerson we got it for a great price because it has a history of flooding.

Have you sold one with a history of flooding before?

Greg Dickerson · Answer

Properties located in flood zones are perfectly fine as long as the heated living area is above the base flood elevation.

Things to consider would be the cost of flood insurance as lenders will require this and it can be expensive in some areas.  Things to consider would be the cost of flood insurance as lenders will require this and it can be expensive in some areas.

From a listing standpoint the flood zone will be disclosed and is standard practice when listing properties in a flood zone.

The only time the properties can become hard to sell is that they are below base flood elevation and have a history of flooding.

Flipping a house in FEMA flood zone?

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