Worth Buying a MPH on a 100 year flood plain map?

I am considering to buy a MPH in a 100 year flood plain map. Approx 90% of the lots are rented. No POH. What are the risks? 

How much of the park is in the flood plain? What is the impact of the flood – how many lots are wiped out, and does it take out the entrance?

Thanks Frank for your quick response. 100% of the park is in the flood plain. I need to get more details on the same. It is a 28 lot MPH with no POH. All Public roads - so do not think it would take out the entrance.

That’s a lot of risk. What’s the cap rate on this park?

The cap rate would be around 10%.

You made that question easy then … punt. No way I would take on that risk for a 10% cap rate. Not even close.

I have thought about this also and you might find this interesting
According to the FEMA FAQ website, a 100-year flood is defined as:

The term “100-year flood” is misleading. It is not the flood that will occur once every 100 years. Rather, it is the flood elevation that has a 1-percent chance of being equaled or exceeded each year. Thus, the 100-year flood could occur more than once in a relatively short period of time.
And correct me if I am wrong but insurance only works once because if they don’t cancel you they raise your premium enough to cover losses.

Those are both great points, but an even bigger problem is liquidity. 99% of buyers and bankers won’t do flood plain deals. So you’re potentially stuck with the park forever. Now that may be different if only a portion of the park is impacted, but you’re talking 100% here. That being said, you should check out if 1) you can change the floodplain designation with minor fill or some other means to divert water 2) if the designation is accurate (they do change occasionally) 3) what Kurt Kelley at Mobile Insurance has to say about the insurance issues. But none of those issues matter if the deal is only at a 10% cap rate – that’s not a fair risk-adjusted cap rate for you, the buyer. At 14% it might be more interesting (but even then, not that much, given the information).One final solution: zero down and seller carry to full maturity. That cures all ills.


Thanks to both Frank and bwk for the excellent view point. Will review the same in greater detail and will get back to you with more information. Thanks.

If the seller is willing to negotiate a deal with about 13~15% return, is it worth? Apologies for many questions

Define that: what cap rate are your talking about, and give me the exact details on the terms (down payment, interest rate, etc.)Frank

Here are the details after my analysis.The area is in the 500 year flood plain. 28 lots rented @ $195/monthTotal of 31 lotsAsking Price = $460kCity Water and Sewer and City Roads. Paid by Tenants.Cap Rate = 10%Lot only, No POH.Request your guidance for finalizing the offer rate.Agent says that the flood insurance is not required and we should include a clause in the lease agreement.No Owner Finance.Country Appraisal District Property Market Value: 85kWith this valuation, will i face issues in getting loan? Thanks

I’m also considering a park with some flooding issues.
Did you end up buying the park?
If so, how’d it turn out so far?

NEVER knowingly put humans in harms way. Question, would you move your family with a new home on that property??? Why not??? Money can really be the root of all evil and why are people even thinking about the problem–Oh the real reason is all about how much money I can make–the cap rate!! I have been there never will I even consider a park in a flood after I saw the destruction to humans and property and I was the owner!!! Their are hundreds of parks for sale without that issue WHY knowingly put your residents in DANGER??? Are good parks that difficult to find??? Never be in a hurry to buy parks–we are still looking after a year and have the cash!!!

Carl, you don’t know nearly enough about this deal to say that. The park could be only 6" below flood elevation for all we know which would place exactly “0” homes at risk. I live in FL on 2.5 acres that is all in floodplain, but my house is not in a floodplain as its built up. Most homes in my area are in the same boat.

And money isn’t the root of all evil, it’s LOVE of money.

@MobileParkMan , as per your question:

  • “Mobile Home Park with some flooding issues”

My Husband and I own 2 MHPs.

Both of the MHPs are located in South Carolina where we just have had the rain of 1,000 years.

Unfortunately, a lot of people lost their homes to flooding, which is absolutely heart breaking.

Some areas were totally submerged under water while some other areas just down the street were high and dry.

Thankfully, both of our MHPs drained well with no flooding.

One is located about 30 minutes inland and the other about 90 minutes inland.

Actually, some of the worst flooding occurred 120 minutes inland.

You really have to look at the Flood Zone, the topography and the drainage.

We wish you the very best!

Coach we have lived in Fl. and have been there in a hurricane and the average level above sea level in Fl. is ??? When Fl. experiences another nasty hurricane our conversation could be different and the raised elevation might not be enough–we had over 12 inches of rain in less than 24 hours and flooding was a problem. You are correct the love of money is the problem but why justify owning a park knowingly in a flood plain if it has a high cap rate and people are at risk for a known problem? We found that we spent over 12 months just cleaning up and than FEMA came in with more regulations than before for homes on the property to have flood insurance etc. I do not know about the particular situation you speak about I just know what it is like to have people lose their homes and personal belonging and it NEVER happened BEFORE on this property we bough so we felt ok to buy it. For us it WAS about the money and looked like a great investment until the day after the flooding and the look on people’s faces and their sadness–and than I knew I was WRONG!!! Sometimes we have to personally experience the damage to really have a negative opinion about floodplains but we personally from our experience will never buy a property in a flood plain!!!

I’m just using facts here. The fact is that we don’t know if the homes are in floodplain, just the ground under the homes may be.

The fact is that if the homes (not the park) are 1’ above BFE (base flood elevation) then they are not in floodplain, do not require flood insurance and are not at significant risk in a 100 year flood event.

@Kristin, @Coach62, @carl
Thanks again for your input, Coach and Carl ^^
I’ve updated another post on this issue but it’s not in a floodplain.
It appears to be a drainage issue.
And there might be mitigation efforts that can be done.
Also, worst case scenario, if those lots affected are left alone, there are a lot of other lots that have never experienced a problem.
So… not that the issue has been completely dealt with, but after talking to FEMA and city admin, flooding might not be a big risk factor.
Some of the lots were built in a low basin. That coupled with clogged drainage seemed to have caused the problem.

I learn every time I come on the forums. Sorry for taking a while to respond to everyone’s comments. But collectively, these forums have been a great mentor.

Springfield, Mo. a couple of years ago found that during heavy rains certain homes were being flooding that were NOT in a know floodplain and are in high elevation as per rivers, creeks, etc. They found large tracts of land say 160 acres when being developed have NATURAL drainage areas were water flows but failed to take notice that with high density development for streets and loss of normal soil evaporation that excess water was being placed in the NATURAL drainage areas at an extreme rate that was producing up to 4 feet walls of water into homes without any history of flooding. With more extreme weather (heavy rainfalls in short period of time) more areas are receiving flood damage that has NEVER occurred in the past so be aware of flooding that CAN occurs in non-floodplains.