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When you decide to buy Texas investment properties in Houston, Texas; should you consider buying real estate investment property in flood zone? Buying a house in flood zone can be intimidating and requires a little more navigation than a traditional investment property purchase.
However, that isn’t to say that these properties will not be beneficial to your investment portfolio. To help you with the process, we have developed a guide for buying Texas investment properties in flood zones.
Flood zones are geographic areas that the Federal Emergency Management Agency (FEMA) has defined according to flood risk levels. When buying property in the Deer Park, Baytown, La Porte, and Pasadena, Texas areas, always start by reviewing the county flood maps. Each county will identify the flood zone in relation to the property and you should perform your due diligence and cross-reference the property’s flood zone with the FEMA Flood Zone Designations.
FEMA categorizes flood zone properties by the type of flooding and the severity of the flooding in the area. Real estate investors should be cautious of coastal areas, properties in low elevation, and homes near levees, rivers, lakes, and reservoirs. If you plan to buy Texas investment properties in these areas, please note they are considered high risk. This step provides you with valuable information on the real estate investment property in flood zone as well as allows you to anticipate next steps.
After you identify the property is located in a flood zone, you need to investigate flood insurance quotes and all other requirements associated with flood insurance. Your lender or the end buyer’s lender will require flood insurance. You have a number of options to obtaining flood insurance to buy Texas investment properties in a flood zone:
Flood Insurance Quote. Start by researching flood insurance quotes for the Texas investment property. Be prepared as flood insurance for a real estate investment property in flood zone is expensive. In fact, monthly premiums can average $500 per month.
A Flood Elevation Certificate is typically required in order for the flood insurance company to give you a quote. The seller should have an existing Flood Elevation Certificate with their existing flood insurance policy. Always ask the seller for the certificate prior to calling insurance companies. If the certificate cannot be found, you will need to hire an engineer to perform an elevation survey of the property. This can cost an average of $300 to $400 for this service.
Transferrable Flood Insurance. Flood insurance is transferrable from the seller to you and then from you to the end buyer. Ask the seller about the existing flood insurance policy and compare it to the flood insurance quotes you received. Pick the best insurance policy for your needs.
Regardless of your exit strategy (wholesale, rental property, rehab), you need to consider the flood insurance and possible Flood Elevation Certificate costs into your financial planning and analysis. Also, you should ask yourself these questions to determine the impact of your decision to buy Texas investment properties in a flood zone on the end buyer:
Make sure to adjust your investment strategy for maximum success with the answers to these questions. The process is similar to any standard investment in real estate. However, the addition of flood zoning and flood insurance requires a little more attention.
You have made a great decision to buy Texas investment properties in the Houston, Texas area.and we hope our guide has helped you understand the process of buying real estate investment property in flood zones. Have any further questions? Please do not hesitate to contact us at Karma Property Wholesalers.
And remember, if you want great deals on Texas wholesale properties in Deer Park, Baytown, La Porte, and Pasadena, Texas as well as in the surrounding areas around Houston ,make sure to join our exclusive Texas investment properties Buyers List. Have further questions? Contact Karma Property Wholesalers now!