We have found a potential investment property but it's in a floodplain. This property has not been updated much at all so there are no visual signs of flooding and the seller said that it hasn't ever flooded ( his parents owned the property since 1970 but was built in 1965). We want to buy the property but fear of, flood insurance being required if we have it financed through a lender even though the lender states that it's not in a flood plain when they checked. The insurance companies state, that it is. It taxed appraised at 120k but we can buy for 55k. (it is outdated and not designed great but in a good neighborhood and has other amenities) Any suggestions would be greatly appreciated.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
8y
I would never buy a property in a flood plain. In my market there are plenty of good houses not in a flood plane so no reason to deal with it. Being in a flood plain doesn't mean the property flooded, just like not being a flood plane guarantees no water issues. Ultimately between insurances being expensive and the property being harder to sell, I just stay away. Of course in some areas half the city is in a flood plane, so part of this depends on location.
I would check to make sure it is really in a flood plane. They are continually updating maps which can put properties in flood planes and remove properties from flood planes. It could be recently updated so if it was taken out of a flood plane, that would a great opportunity to buy cheap.
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
8y
Look at. the FEMA flood maps to see if it is in a flood plain. www.msc.fema.gov The zone on rhe fllood maps will dictate what kind of flood insurance you might need. If it is federal flood insurance vs a private company cost will be higher. get quotes.
Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes
8y
You need to see what zone, A, AE, V, X...
I actually had a property removed from the floodplain via a LOMA - Letter of map amendment. If property has NEVER flooded you can get an elevation certificate and try to have it removed. It all depends on the base flood elevation of the property in relation to the base flood elevation of the land...
You can still get your premiums reduced by getting a elevation certificate. Google that term and you can read about how it can help you.
I own a couple properties in flood zones, no a show stopper for me but proceed with caution. obviously house should be discounted when sold if in the flood zone but if you can get it at a deep discount with potential of removing it that could be a home run!!
Rental Property Investor · Austin, TX · Member since 2015 · 280 posts · 176 votes
8y
A lot of people don't know it, but you can call FEMA and request a property flood report and it will tell you if your property has ever flooded based on insurance claims. unfortunately, the property owner has to do this. you may compel the seller to do this first, and share the report with you, before you move forward in purchasing the property.