I've tracked down a prime piece of land in a coveted neighborhood in Austin, TX. There is a vacant house on the land that that is a tear down. Discovered the land is in a flood plain in conversation with owner (who wants to sell). I want to work through the numbers to see if this is an opportunity. Here are my questions:
1. What questions / concerns do I need to consider since the property is in a flood plain? Is this kind of opportunity too risky for investors?
2. Where do I get info on costs to tear down in my market?
3. Is there a rule of thumb for cost per square foot to rebuild?
I'm learning all I can in this space and would appreciate any advice or recommendations on the way forward. Thanks!
My first real estate mentor tried to do a tear down and new build on a flood plain in 78745 just over a decade ago. The city gave her the go ahead to demo but once it was time to start building they shut her down. She got rope-a-doped. That lot is still undeveloped to this day.
@Beau Fannon ...Hmmm... The owner shared his concerns about Code Next creating issues as well. The house next door to his is a newer build and is at least 2' off the ground. I was thinking this morning to chat with them and see when and how they were able to get it done. Thanks for your feedback.
Floodplain builds are tricky. Austin's floodplain map just got re-done; it turns out we get more rain than what was originally thought and the 100 year floodplain encroaches a lot of areas where once there was no floodplain issue. If the building is in the 25 year floodplain, you are pretty much out of luck, between 25 and 100 you have restrictions to deal with.
A possible workaround is to do a remodel rather than a new build. A remodel will require you to keep a wall and re-use it during the construction (but double check on this my info is dated).
The new Atlas 14 flood maps make one important change that you might want to consider: an inability to add additional structures to the site. I was considering buying a 13,000sf lot with a house on it in 78721 and went to speak with Development Services. They said, and I later read, that the new flood plain change prohibit adding a second structure (and maybe even more impervious cover) to a site in the floodplain. So if you had planned to do a tear down or add an ADU, you would be out of luck. Just google Atlas 14 floodplain changes and you can read the summary.
Floodplains are really tricky and cause a lot of headaches for home owners. I work in the division of water for the State of Indiana. I wouldn't touch that property unless you had something in writing stating it's grandfathered in under the old regulations etc etc. I 100% agree with @Chris Schorre about adding additional structures.
I have a lot of knowledge and experience with infill residential development (and floodplain issues) in Austin. I am willing to meet up to consult with you if interested.