100 yr floodplain map - questions, considerations

I’m in due diligence on a rural MHP that has a small creek running the distance of the site, which per FEMA has a rather large 100 yr floodplain buffer around it. I have spoken with multiple residents who’ve lived in the MHP for between 10 - 20 yrs, and neither have noted any flooding to the point where any homes were impacted (community wide). A high volume home broker says that the FEMA maps are not accurate for the area.My questions: 1.) Would a “typical MHP lender” take into account these accounts from long term residents?2.) Under what circumstances would mobile home lenders (chattel lenders) do 100 yr floodplain deals?I’d appreciate any feedback from anyone with direct experienceThanks,Josh

Floodplain is like a scarlet letter that you can never escape from. Lenders are not going to listen to residents, or some broker that says the FEMA maps are not accurate. You are either in the flood plain or you’re not. A surveyor  can tell you for sure. If you are in the floodplain, then your exit strategy is diminished, as is your ability to get a loan. Not because the park is going to float away. Not because it ever is even going to flood. But because you have the floodplain designation. Does that mean you can’t buy in a floodplain? No. It just means that the other qualities of the park (location, CAP rate, etc.) are so strong that they more than make up for the handicap.

Thank you, as always, Frank. Does your last sentence mean that a favorable enough location and cap rate can over compensate for the scarlet letter that is a floodplain designation? If so, I suppose I should just run a deal analysis with a few % ding on the exit cap, given that the end buyer would probably need to be un-levered?

Correct. Flood plain is no different than many other negative attributes. The only thing that makes a park impossible to buy, in our opinion, is a lack of permit rendering it illegal, or environmental pollution, or lack of clear title. Otherwise, it’s all a matter of rate of return, seller financing, and amount down. There is NO perfect park (although we own some that are very close). The better the location (normally) the worse the density, utility line construction, etc. because they have not allowed parks to be built (in general) since the 1970s, which pre-date modern home sizes and PVC.Would you eat a hamburger that is not real meat and a has a stale bun? Would you do it for a dollar? I do it every time I order off the McDonald’s value menu, or buy some generic cleaner at the Dollar Store.  It’s all about the money.

As an former owner of a park in a flood plain the pain will break your heart to see your residents suffer when their belonging are damaged and YOU HAD KNOWLEDGE of the problem. I cannot thing of an intelligent reason to consider the property–their is more to life than MONEY. If it is in a flood plain IT WILL HAPPEN!!! Talk to an owner of a park that had a major flood and ask if he would do it again–NEVER!!! There are many properties to choice from–move on. Please why are we putting people in unnecessary danger??

All good points – there are many problems to contend with in flood plain, so you better have a good handle on the potential impact when the rains start.