Is This Property Worth Buying (In Flood Zone)?

[James Madison]

Hi All,

I am just under contract with a duplex and would like to know your opinions and see if it is worth closing it.

Property:

it is a duplex in a very good part of town in an eastern city in Tennessee

Each unit has 2 beds and 1.5 bath

Under Contract Price:

$285k

Existing Rent:

Tenants are long-term (about 4 years plus) tenants on month-to-month basic. They are paying about $1800 in total for both units.

Potential Market Rent:

I think it could rent for $1200 each. $2400 for both units.

Downsides:

• It is in a flood zone. The seller said the floor insurance is $500 / year and I am doing due diligence on this. I looked up FEMA map and it looks like it is on the edge.
  
• It has a lot of tall trees on the property line, which requires gutter cleaning and upkeeping.
  

I am thinking of getting a loan, but nowadays the interest rate is high (6.7%).

Do you guys think it is worth it? My concern is what if it floods once and it will destroy all the profits over the years.