Seller didnt reveal flood zone.Already in contract. Help.

[John Jacobs]

I'm starting to feel like a jumped the gun a bit on signing the purchase contract. I just found our recently that the house is in a high risk flood zone and just took a large chunk of my returns. FYI the owner/agent failed to disclose that the house was in a flood zone when I signed. I was still wondering that even with the extra 2k a year in flood insurance if the following would be considered a good deal.

The property is two units with two apparently solid tenants already occupying the units. I want to know if on its face, would you guys consider this a good, bad, or decent deal. My goal is to have a good cash flow and a good Return on Investment. Let me know if there’s anymore information you guys needs in order to make a fair evaluation.

2 Unit Residential

129,000 Purchase Price

25% Down = 32250

Loan Amount 96750 @ 4.75 Interest

Closing Costs = 6500

Down payment plus closing costs = 38750

Mortgage plus Taxes = 9720/ year

Taxes = 3500 year

Rental Income (2 Units) = 21600/ year

Landlord/ Hazard Insurance = 1800 /year

Flood Insurance = 2000/ year

Sewer and Water = 1200/ year

Maintenance and Repairs = TBD

Thanks

[Russell Brazil]

Flood zone is not something that needs to be disclosed in my market. You can and always should check a houses status if it is near water at floodsmart.gov. 

Also if you think the property is located high enough, you can get an elevation survey done to try to get the house exempted from flood insurance.