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Old 05-03-2013, 02:49 PM
 
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So, how hard is it to finance building a home in a flood palin. It would be tearing down an exisiting home that is about 100 yards away from a creek (nothing wrong with home, just small), but the area is in a flood plain. Is it much harder to get financing to build, even if you get the required flood insurance?
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Old 05-03-2013, 03:23 PM
 
Location: TX and NM on the border of the Great Southwest.
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I don't know which state you are in but in Texas I owned a home in the 100-year flood plain for several years. The way I understood it was that no new construction was allowed in the floodplain unless the land under the new construction was sufficiently built-up. However to build up the land, an equal amount of fill had to removed somewhere else within the plain.

Keep in mind this was only what I was told, and actually experienced in one instance, while I owned this residential property. I never consulted a real estate attorney on the matter. Instead I sold the property because in my life, I have never seen Federal, or State, restrictions on land use become less restrictive.

BTW, we inherited this property or else I would have never owned it. If you're getting the property for free, or for very little cost, it may be worth your time and money to do something with it. However, you should consider that the location will very likely adversely affect the property's market value now and in the future.
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Old 05-03-2013, 04:09 PM
 
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It has no bearing. You just have to get proper flood insurance.

The challenge is finding a Construction Loan to build anywhere, much less a Flood Zone. If a builder will do it on his dime, a lender can do a One Time Close at the tail end when you have your Certificate of Completion. At least that's the way that I do them.
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Old 05-03-2013, 04:55 PM
 
Location: Scottsdale, AZ
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Don't know if you own the property or not, but before you invest I would speak with the Planning & Zoning people in your area about building on this lot. Just because it has an existing building does not mean they will permit a new one. The old one may have been built before certain rules came in effect.

I have worked with builders here in AZ that have built homes in floodplain. They were required to provide the zoning people engineered grading and drainage plans that showed both how the home would be constructed and how water would be controlled, stored and/or diverted in the event of a flood. This could cost anywhere from $5000-10,000. If septic is an issue this could effect the plans greatly. We were almost always able to get approvals, but building in this environment was more costly for the above reasons.

Of course flood insurance may also be required been if built with the proper engineering and approvals.
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Old 05-03-2013, 07:24 PM
 
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building in a flood zone is not much different then building in a non-flood zone. Only difference is the home must be designed properly to meet FEMA requirements for the particilar flood zone. This usually means the home's elevation needs to be a specific height. It could mean an extra 1' of fill dirt is required or it could mean 3' of stemwall is required or possibly something more complex. It could be mean an extra $1000 of cost or an extra $40k of cost to build. It all depends on the flood zone itself, the elevation of the lot itself (where home to be built), the required elevation of the first finished 'living' floor of the home per FEMAs maps and the expected elevation of your first floor after the home is built.

The FEMA rules can get complicated. You must abide by them.

The financing part simply requires flood insurance and proof that fema rules are being followed. counties/cities will NOT approve any home to be built in a flood zone UNLESS the FEMA rules are followed. They check the plans/elevations to make sure you follow the rules. Ask your county building department about building in flood zones. they can guide you to rules.
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Old 05-03-2013, 08:28 PM
 
Location: Texas
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Here's the issue Jeoff, any loan institution is going to want the property to be insured which warrants their investment. No insurance company is going to write a policy on a house in a flood plain. It would be pretty stupid on their part considering the odds are favorable for the house to suffer a major loss during the normal 30 year pay schedule. Most metro areas will not issue a building permit on property that is in a flood plain. So the deck in kinda stacked against you. If you have cash and no municipal inspections, you can probably get 'er done. To rebuild on borrowed money- slim to none are the odds.
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Old 05-03-2013, 08:37 PM
 
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Quote:
Originally Posted by TrapperL View Post
No insurance company is going to write a policy on a house in a flood plain.

Most metro areas will not issue a building permit on property that is in a flood plain.
You can get a flood insurance insurance policy. Call any insurance agent.

You can get a building permit for a new home in a flood zone. The building permit won't be approved until the home meets the FEMA requirements. You need to know the requirements and custom design the home to meet the requirements.

Lots of homes that are in flood zones have never flooded. I would say the vast majority of homes that are in flood zones have never flooded.

The key to building in a flood zone is to ensure the home is built to withstand any flooding of the land...such as elevating the home so that the interior of the home is not under water.
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Old 05-04-2013, 12:37 AM
 
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Some places are more conversant in flood zones, some find them scarey.

There may be wetland requirements or restrictions when building along a waterway. You might have to hook into the city/county sewer and water when you had hoped for well and septic...or when well and septic were already there. The soil my not be so stable to plant piers even. Check out how quickly any erosion has been happening. I know someone who winters in Fl and says every time he goes to his home up north he notices the backyard is sloping more.
You may be required to start the first floor higher than you expect....I know people with two story basements to meet new code.

You should check if just a part of your lot is in the flood plain or all of it.

See if the land is mushy and water pooling in it. If so it could be a wet meadow or saturated by surrounding water in rain. In other words, it also might not perk.


Do you already know how much the creek generally overflows in hard rain?


Sometimes living in a flood plain drives up life insurance and auto insurance and insurance on possessions.

Yes, as others said you need to contact zoning, maybe your local Corps of Engineers office, your insurance agents.
Accessory structures like sheds, carports and detached garages...and sometimes decks and patios...can need to be anchored to resist floating (or some areas like them to not be attached...for example a deck touching the house but not anchored to it so as to cause more damage in a flood), have certain vents, generally must be designed to minimize flood damage.

Yes, as others said you need to contact zoning, maybe your local Corps of Engineers office, your insurance agents.
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Old 05-04-2013, 07:28 AM
 
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To do some basic homework, call for a quote on flood insurance on the existing house. Who knows, it may be $200 or $10,000 per year. If it has a mortgage it will be required to have flood insurance. That may help you decide if you want to pursue this dream.
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Old 05-04-2013, 10:21 AM
 
Location: TX and NM on the border of the Great Southwest.
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Quote:
Originally Posted by TrapperL View Post
No insurance company is going to write a policy on a house in a flood plain.
Just a note. Since I did the financing on the floodplain property I had previously mentioned, I required that my buyer obtain insurance on the property. He had no problem getting a policy. However, perhaps one of the considerations by the insurance company was that the area averages only 17" of rainfall a year, and much less in recent drought years. A flood every 100 years is extremely optimistic on the part of the Federal government who establishes the criteria for floodplain designation.
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