Builders and wholesalers pricing Houston teardowns: check the 500-year floodplain before you check comps.

Since September 1, 2018, the City of Houston's Chapter 19 rules require new homes in the 500-year floodplain, not just the 100-year, to be built 2 feet above the 500-year flood elevation. From the Freese and Nichols summary of the April 2018 council vote:

1) It covers new construction and substantial improvements, which includes expanding a building's footprint by 33% or more.

2) Zero net fill now applies in the 500-year floodplain too. Fill you bring in to raise the pad has to be offset on the same site, so you can't just truck in dirt.

3) Harris County's separate 100-year rules don't apply inside the city limits, so a lot inside Houston and a lot in unincorporated Harris County are underwritten differently.

What it means for a wholesale price: a lot in shaded X can carry a different build cost than an almost identical lot two streets over outside it. If your ARV comps are homes built before 2018, the cost to hit that elevation isn't in them.

And FEMA's own number: 25 to 30 percent of NFIP flood claims are paid on properties outside high-risk areas.

Builders: drop the areas and lot size you're buying below. Wholesalers: drop the zip, price and ARV below and I'll tell you if the numbers hold.