Check out the next podcast in our series on smart real estate investing strategies!
Today Marcia and I explain flood zones and their importance regarding your investment decisions.
René Nelson, Eugene commercial real estate broker
Marcia Edwards, Eugene residential real estate broker
Smart Real Estate Investing – Part 3
Marcia Edwards: Let’s talk a little bit about fires and floods because what goes on in the minds of people during their ownership is the trigger of the conversation about flood insurance and fire protection insurance is not really addressed until they go to sell or buy.
René Nelson: Yeah, I had recently helped a seller sell a small office building on Country Club, so you know where I-5 goes right by Country Club and the river is on the other side.
Marcia Edwards: Right there, yes.
René Nelson: Right there, that whole area is in a flood zone, and the typical flood insurance is $20,000 for an office building right there.
Marcia Edwards: That’s crazy. I didn’t realize it was so elevated, but when you look across, you think, “Well, that water would be on that land if it were across the highway.” So I understand what you’re saying in that location particularly.
René Nelson: Yeah.
Marcia Edwards: The interesting thing is that FEMA maps are not stationary. They revise those frequently through new patterns of water movement and things, so you can’t assume that you’re not because you weren’t previously in a flood plain.
René Nelson: And how do you address that, Marcia? When someone’s getting ready to buy a house, I know the title insurance company will typically check for you to see if it’s in a flood zone, and then they call their insurance agent, right? And then what’s the next step?
Marcia Edwards: The insurance agent will have the most current FEMA maps, and based on that, they’ll tell you if they’re going to trigger an investigation into flood insurance or if it’ll be waived and not addressed. So they’re just looking at the same maps, just the most current version of those. And what I’ve discovered is that there’s situations where the property is in the flood plain, but the house, the improvement is not, so that does not mean that you’re gonna have to pay flood insurance for the property in its entirety. And what you’re looking to do for the lender’s purposes is flood insurance is something that you cover the improvements on the property for.
René Nelson: Okay, and if the base of the floor is built above a certain elevation, then the flood insurance is waived, right?
Marcia Edwards: Exactly. And so you’ll see some neighborhoods where it looks like it’s a low elevation, but you’ll see that the foundations are set a little higher, a couple of feet even, higher, so they’re out of the flood plain. The best thing to do is get a survey for elevation, an elevation survey, and that’s a process that you can submit that to FEMA and get what’s called a LOMA certificate, L-O-M-A. That certificate says we are not in a flood plain, and it’s been investigated to the satisfaction of FEMA that it’s not a flood plain.
René Nelson: Oh, interesting. Okay.
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