Flood insurance cutting WAY into our cash flow...

Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes

My husband and I just recently bought a SFH in Saint Petersburg FL. The property is elevated and there is a big drain in the back. However, it is still in a flood zone and we were quoted at $4,000 for the YEAR in Flood Insurance. The flood insurance and home insurance is almost as much as the mortgage... we are set to close on Oct 14. Any and all help and advice... please!

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Zach KiddPro Member

Real Estate Agent · Clearwater, FL · Member since 2015 · 176 posts · 148 votes

@Jennie Monfried

Flood insurance will drive you batty in this area, but there are a few things you can do.

1 - Verify the flood zone is current.

2 - Elevation Certificate may adjust the impact.

Both of those can be challenged and updated.

3 - Get quotes from different insurance companies and brokers.

That sounds like a waterfront rate, which is not unusual for a property backing up to a drainage area. Frustrating for sure.

That may be subject to review as well.

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Gary L Wallman
Rental Property Investor · Beavercreek OH · Member since 2018 · 422 posts · 970 votes
6y
Jennie,
That seems awfully high. I just sold my home in Panama City Beach that was directly on the Gulf of Mexico. I paid $650.00 per year at the second home rate (which is higher then primary residence) through the National Flood Ins. program. I was in flood zone X.
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Zach KiddPro Member
Real Estate Agent · Clearwater, FL · Member since 2015 · 176 posts · 148 votes
6y
@Jennie Monfried
Flood insurance will drive you batty in this area, but there are a few things you can do.
1 - Verify the flood zone is current.
2 - Elevation Certificate may adjust the impact.
Both of those can be challenged and updated.
3 - Get quotes from different insurance companies and brokers.
That sounds like a waterfront rate, which is not unusual for a property backing up to a drainage area. Frustrating for sure.
That may be subject to review as well.
3 Reply
Blake Dailey
Investor · Ogden, UT · Member since 2018 · 295 posts · 208 votes
6y
Definitely get several quotes from different companies - I did this is Panama City FL and saved about 10%. Talk to other investors in the area and find who they insure with to get referrals. Hope that helps!
1 Reply
Clint ShelleyPro Member
Surveyor · Dothan, AL · Member since 2014 · 425 posts · 391 votes
6y
@Jennie Monfried
Do you have a current elevation certificate? This will tell you some key information and I could advise from there. If not, first step is to get one. If data shows structure is above the base flood elevation, you could apply for a LOMA for removal of the insurance requirement. Beware, even if you could be removed, some lenders may still require you to carry flood insurance, if they choose.
Clint
1 Reply
Jeff Stanners
Member since 2018 · 21 posts · 7 votes
6y
I have a property in a flood zone and yes, the insurance is a lot. My experience was that shopping around did not matter much, it was a pretty standard rate. A couple of things in my situation
- The flood insurance is required by the mortgage company for their portion of the property. So if you put 20% down, you only have to insure 80% of the property. As you pay down your mortgage, that flood insurance can be adjusted each year so you pay less the longer you own the property (assuming you're paying down the mortgage)
- When I refinanced, the bank I refinanced with didn't require me to buy flood insurance. I'm guessing they overlooked that the property was in a flood zone.
- I've had this property 20 years, and about 5 years ago it was determined that the HOA was responsible for the flood insurance. Bad News = the HOA fee went up considerably; Good News = only 10 units in the complex are in the flood zone, so the entire HOA is contributing to my insurance and I'm now insured.
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Lynn McGeein
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
6y
I think Florida allows private flood insurance companies that may save $$$ from the standard NFIP rates -- see link (sometimes they remove the online link, but it's a state government link for Florida Office of Insurance Regulation in case they do:

https://www.floir.com/Sections/PandC/FloodInsurance/FloodInsuranceWritersFL.aspx

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Jennie Carolan
OP
Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes
6y
@GaryLWallman Thank you for your response. I agree... it sounds VERY high. $650 per year sounds more realistic...
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Jennie Carolan
OP
Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes
6y
@Zach Kidd Thank you for your expertise. 1- The flood zone is current. 2- We got the elevation certificate...originally only lowered the rate $100 for the YEAR! POINT #3- winning point. we got a different quote now at $1,100. Crazy the difference! We will be going with this company. Thank you!
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Jennie Carolan
OP
Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes
6y
@Gary L Wallman Thank you for your response. I agree... it sounds VERY high. $650 per year sounds more realistic...
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y
Get an elevation certificate to see if you can get a flood zone exemption.
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Jennie Carolan
OP
Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes
6y
@Blake Dailey thank you! Great call. We got a MUCH better quote... from $4,000 to $1,100.
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Jennie Carolan
OP
Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes
6y
@Clint Shelley We got the elevation certificate...originally only lowered the rate $100 for the YEAR! We went with a different company who offered us at rate of $1,100 for the year as opposed to the other rate of $4,000. Thank you!
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Jennie Carolan
OP
Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes
6y
@Jeff Stanners Your response was extremely insightful. I had no idea that you only need insurance for the amount of the loan vs the price of the home. Thank you so much! Glad your HOA is covering your flood insurance. Bummer that the HOA fee went up though.. hopefully not by too much!
1 Reply
Jennie Carolan
OP
Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes
6y
@Lynn McGeein Thank you for this link. Just bookmarked it!
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Blake Dailey
Investor · Ogden, UT · Member since 2018 · 295 posts · 208 votes
6y
@Jennie Carolan that is great, and a big win for your cash flow!
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Clint ShelleyPro Member
Surveyor · Dothan, AL · Member since 2014 · 425 posts · 391 votes
6y
@Jennie Monfried
Post your section C and or E from the elevation certificate and I can tell you if there's anything you can do to fix it.
Clint
1 Reply
Christian Nachtrieb
Rental Property Investor · Medford, MA · Member since 2016 · 288 posts · 171 votes
6y
Food for thought.
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http://www.ouazad.com/resource...
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Jennie Carolan
OP
Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes
6y
@Russell Brazil Got it... unfortunately no exemption but we did get a lower rate (slightly). Went with a different company and got a MUCH better rate ($4,000 a year originally. Now $1,100 a year).

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Jennie Carolan
OP
Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes
6y
@Clint Shelley Thank you so much! We actually just got a better quote ($2,900 less than the original quote!) Next time I will be sure to reach out to you and take you up on that offer! Thanks again.
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Jennie Carolan
OP
Rental Property Investor · Newport Beach, CA · Member since 2018 · 44 posts · 22 votes
6y
@Christian Nachtrieb definitely food for thought. Thanks for sharing this article. The future mortgage rates in coastal areas/flood zones will be interesting to see...
0 Reply
Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
6y
@Jennie Carolan I just had a client in Columbus, OH purchase a single-family property in a flood zone. We got multiple quotes and one was very affordable.
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Zach KiddPro Member
Real Estate Agent · Clearwater, FL · Member since 2015 · 176 posts · 148 votes
6y
I did have another thought as I was driving past a similar situation yesterday.
Many of these properties back on to an easement for the drainage. Sometimes, it's a full lot's worth of space (or more) behind your property to the actual drainage area.
If that's the case, you might be able to legally challenge that you own "waterfront" property and get your property reclassed.
I've never done it, but if your property is similar, that would be a worthwhile pursuit.
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Clint ShelleyPro Member
Surveyor · Dothan, AL · Member since 2014 · 425 posts · 391 votes
6y
@Zach Kidd
If any portion of the lot touches the flood zone, it triggers the insurance requirement (federally backed mortgages). One trick is if the house itself is out of the zone, you can subdivide the lot into 2 pieces. One flood zone lot, one out.
Clint
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Zach KiddPro Member
Real Estate Agent · Clearwater, FL · Member since 2015 · 176 posts · 148 votes
6y
@Clint Shelley I would be equally concerned with the waterfront designation.
Locally, that means much higher taxes too.
By eliminating that (presumably undeserved) designation, you could save quite a bit on both taxes and insurance.
Flood Zone is better than Flood Zone Waterfront, unless it's actually on the Gulf of Mexico or the intracoastal, where that would result in a much higher property value.
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Jason ColemanPro Member
Real Estate Agent · Greensboro, NC · Member since 2017 · 200 posts · 161 votes
6y
@Jennie Monfried
I haven't tried this personally but I just heard Brandon talk about this on the podcast. He mentioned a fellow investor getting the flood insurance initially like normal. Then after closing (and not in a rainy season), cancelling the flood insurance. He said the lender will repeatedly ask/tell you to put flood insurance back into the property. Just repeatedly tell your lender "nope" . The lender will be required to get flood insurance through their insurance contact. This contact will be providing flood insurance at about half the cost. This will be billed to you through escrow. This will cut your flood insurance cost significantly. I wish I tried this on one of our coastal properties. It could have been a good BRRRR but we decided to flip based mainly on the flood insurance. Anyways, good luck to you.
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