DH and I have started to joke that we should write a book. Either that, or we should just rent from here on out, because we have been slapped with more strange issues in the 12 years we've been investigating the second home market than should happen to people in a lifetime of home buying.The topic of this post involves flood insurance. Because oftentimes VRs are waterfront, this may be more of an issue for those trying to buy a second home/vr than most people will be exposed to buying residential properties, but that is not a given. Flood zone maps are continuously being modified, which has indeed caused problems for the residential customers I had before leaving the real estate sales industry 5 years ago. It was very impressive to me in fact how many residences were impacted by the change in flood zone maps.However, the focus here is the VR, be it creek/river front or ocean front. We have been amazed at how many ocean front properties on the Outer Banks of NC that are not eligible for flood insurance, and therefore financing, because they are at risk of washing into the ocean with the next big storm. Of course, these are properties that had sold for over $1MM that are now listed for 1/10th the price, cash on the barrel. Granted you are also taking on the risk that you will not be able to inhabit that structure when the next storm blows through, or you may be able to rake in the profits for years to come. Care to throw the dice? And then there is the case where we tried to buy a river front in WV. We were told that the owner had flood insurance to a tune of $350/year, but with USAA, an insurer that we were not eligible for since we are not military. Still, we figured that the insurance through another company would not be much higher than that, and we pursued the purchase. We quickly ran into troubles when the quoted flood insurance came back at $9,300/year. Yup, not a typo. So we plunked down another $450 to get an elevation certificate, which the owner did not have. I won't delve into the reasons why she would not pay for it, but we wanted the property so we did pay. NEVER AGAIN. ALWAYS MAKE THE SELLER PAY FOR DOCUMENTS NEEDED TO SELL THEIR PROPERTY.Ironically, it turned out that the elevation cert we paid for did not do the trick for FEMA, who wanted the original elevation cert from when the building was built. It seems as though if you can prove that the structure was built to code to the existing flood plan at the time, you can get it grandfathered. So I called around to the various survey companies in the area to see if they had done the original. You may have more luck that we did at the official records office, but between the courthouse fire and the general lack of organization, no prior records could be found for this house that was built in the 1980's. Yeah, not ancient history here.And still after submitting this, FEMA still wanted $9,300 year. The problem was that no building plans could be found, and indeed the seller admitted that it was likely that the shed structure on the ground level of this elevated building was added later, an enclosure that IMO was necessary to insulate the well pipe and sewer pipe as it was exposed going from the ground to the elevated first floor. Similar to many rural areas, building code was slow to be imposed. So much for grandfathering. We could not prove that the existing structure was the original.FEMA's website will convince you that if there is existing flood insurance, you should be able to transfer it for roughly the same price. Not so. In my investigations, I came across people who had their flood insurance jacked up simply from refinancing, to the tune of an extra $3K/year. No transfer of ownership, and the flood insurance co remained the same, but none the less...Further they will try to tell you that you can grandfather the property. We even got Senator Manchin of WV involved with FEMA, to try to get to the bottom of the drama. What this provided was a second person from another FEMA office that told us that it is what it is, don't look for logic. They are allowed to change the premium at any time for any reason. Officially, we were screwed.In the long run, given the environmental issues WV faces in terms of fracking wells, we were probably blessed by this issue causing us not to buy the property, but be aware....flood insurance is not a simple subject.BTW, that property is still available if you are OK with the possibility of pipes freezing. They removed the shed structure and insulated the pipes within a PVC pipe. I'm not convinced it will work, but hey, she has come down in price.IP
Thanks for sharing your experiences, IP. You did end up buying another property, right?
You did end up buying another property, right? Heh. Settlement was SUPPOSED to be tomorrow. Stay posted for future postings with brand new issues. The deal is not dead, but the continuous rising of new issues is JUST INSANE.We have basically come to the conclusion that searching for vacation properties, at least those in the less than stampeded areas, is fraught with issues of a surprising and unpredictable nature.IP
Ugh!Well good luck for tomorrow!I would love to get a place at one of the ski resorts. I would rather go up in the summer anyway and rent for ski season, but condos are still well over $200,000 plus high HOA fees, property taxes, etc, etc.
Ugh!Well good luck for tomorrow!Thanks. It's become rather farcical, and fortunately by now we've learned to laugh. NEVER GET SO EMOTIONALLY INVOLVED IN A PROPERTY THAT YOU CAN'T WALK AWAY. Tomorrow isn't an option, nor is the following week due to 3 days that I have to be at Federal Jury Duty and the two days the settlement office is off for Thanksgiving, but they are going to need some time to address the issues in question anyway.I'll try to give more details later. Suffice it to say that we are looking to buy on top of the Marcellus Shale region, and all the issues that implies. Of course, the shale base to the creek also insures the clean and clear waters we seek, so we seem doomed to the ensuing complications.I need a break from this for now, though, and am about to fortify myself with some liquid compensation, which means I need to stop posting soon.IP
I would love to get a place at one of the ski resorts. I would rather go up in the summer anyway and rent for ski season, but condos are still well over $200,000 plus high HOA fees, property taxes, etc, etc. Have you gone to look at any of the ski resorts? What are some of the issues involved unique to buying there?IP
Skiers want to be fairly close to the slopes, on the bus line or a five minute drive. Ski in/ski out are most desirable, but very expensive. Ski season is mid November - March, sometimes April depending on snow, so only 4 1/2 to 5 months.April, May, September, October and first half of November are dead times, too cold to do anything, yet no skiing.New laws being approved now allow for canopy walks and zip lines to be put up in the forest, so that adds to summer adventures (along with river rafting, biking, hiking, golf, etc). Prices are still high, ski season is short - although summer months are available. Most skiers are college-aged and come up in groups of peers, so higher risk of damage.
Ski season is mid November - March, sometimes April depending on snow, so only 4 1/2 to 5 months.April, May, September, October and first half of November are dead times, too cold to do anything, yet no skiing.That's a tall order for positive cash flow. We have a definite prime season as well, with the summer being the strongest, but Spring and Fall are decent as well for the hikers and fishermen, as well as some desire in the winter for hunters. At least one of the rentals in the area is highly booked for most of the year...weekends at least. It's hard to know just what the number of days it will rent for, which is why I also take the approach of how many weeks does it need to rent for to pay for itself, as well as trying to figure out ROE.Good luck, and keep us posted on your search!IP
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