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Did any of you buy houses in New Orleans after Katrina flooded most of the town? What was your experience?
Are you considering buying houses in the Houston area or south Florida?
This article will give you a few things to consider before making any offers:
https://www.realtor.com/news/trends/hurricanes-harvey-and-irma/
Many of these houses will need to be bulldozed instead of rebuilding.
FEMA has some buy out programs for flooded homes but they are already out of money.
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It’s not just the homeowners without flood insurance who can get hurt. Sandy victims are warning Harvey and Irma homeowners that even after FIVE YEARS, many Sandy homeowners could not get relief from their insurers:http://fortune.com/2017/09/08/flood-insurance-fema-irma-harvey/
The Wall Street Journal has this article on homeowner’s insurance versus federal flood insurance — when a hurricane hits. After long experience with previous hurricanes, many insurers devised lots more ways to wheedle out of claims.
https://www.wsj.com/articles/what-homeowners-insurance-wont-cover-if-a-hurricane-hits-1504897428
What the WSJ article didn’t cover were the various private insurance companies who would choose some percentage of higher dollar claimants to deliberately stiff, on the advice of McKinsey & Co in the early 2000s. Farmer’s Insurance in Texas was one of the worst, and even had an internal department devoted to selecting those claimants to stiff, and to devising an endless series of excuses — while of those claimants would run out of patience and/or money and simply give up. That internal department also penalized honest employees who didn’t buy into the dishonesty and corruption. I can’t speak for other insurance companies, but McKinsey had given such rotten advice to many of them.
And in east Texas, it’s not only Houston that was affected. Lots of smaller towns are in big trouble:
–Dee
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As I was just getting started in this biz I did over 20 rehabs on the MS Gulf Coast after Katrina. Rehabbed and flipped most, however kept a few for rentals.
Beware as FEMA flood maps will change 12 – 24 months in the future. If you are holding intending to sell when that happens, it may be nearly impossible to sell a house. Also expect all insurance to grow (maybe even exponentially). Mine tripled almost overnight.
Buy right by driving your MAO very low. 30% of ARV may be too high for your MAO.
Katrina kick started my biz. I was focused on building long term rentals. The rehab resales and a few wholesales were a means to do that. It also cured me of wanting to rehab houses.
Good luck,
Hank
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The latest update to this horrendous tragedy is how Houston homebuyers were deceived into buying in flood plains that had been PLANNED (since the 1940s) to be flooded in case of more water than normal drainage could handle:–Dee
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Another side to the home business in states that suffered heavy flooding in coastal areas (Texas, Louisiana, Florida, Georgia, Alabama) is the view from the note buying industry. Tom Henderson, aka The Note Professor from the Dallas/Fort Worth area, recently offered this thought about buying notes in such areas:“I have received several requests about selling notes where the property is located the areas of the paths of hurricanes Harvey and Irma, so I thought a brief message concerning these notes would be in order.
Am I purchasing notes on the coastal lines of Texas, Louisiana, Florida, as well as Alabama and Georgia? YES. Realize, however, these notes will be given special attention as to any, if any damage was done to the property.
Please do not send me any quote requests for properties that were flooded, or where the property is now vacant.” [my emphasis!!!]
Many of the properties, even in Houston, the Texas and Louisiana coast, were not damaged, and I would love to purchase these notes.”
–Dee
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This update is about how flood insurance may well either not provide enough cash to save a flooded home, OR may be delayed for YEARS longer than the homeowner can wait:I’m guessing that if such a homeowner is being hung out to dry by a many-years-long insurance claim process, and has to do a firesale in the meantime, that insurance claim “probably” does not transfer over to the new owner or investor.
So I think the advice to such a buyer would be to do some serious due diligence.
–Dee
PS. Would a federal insurance claims agency (running short of funds) have an incentive to drag out the claims process — with the likelihood that over a few years the number of legal claims possible would dwindle dramatically?
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