Cut Your Expenses on Investment Properties?

Are you missing out on a way to make a serious reduction in the expenses on your real estate investment properties? If you have a mortgage on your investment property (or any property for that mater), you likely have a clause in there that says if the property is in a F.E.M.A. designated flood zone, you are required to maintain flood insurance on that property. Did you know that F.E.M.A. has been updating those maps (F.E.M.A. map modernization)? It is not a well published fact, but if the map that covers your particular property has been updated and you are no longer required to keep flood insurance, you could chop a large amount off you annual expenses for that property. For a property with $350,00 worth of building and content coverage, that could be $2,500 to $5,000 per year depending on the area the property is in. This information came to my attention when I read an article by Julie Patel and John Maines in the Sun Sentinel about changes in counties in south Florida (Dade County changed, Broward and Palm Beach Counties pending), but there are areas around the country as well that have already been updated.

You should check the F.E.M.A. map for the area your property or properties are located in to see if there has been a change. If flood insurance is no longer required, you may be able to cut it out of your expenses. F.E.M.A. recommends that you keep flood insurance even if it is not required. It does occur to me that extra premiums taken in with not much exposure helps their bottom line. They express the opinion that many times properties that could have had flood insurance but did not purchase it are the first ones in line to ask for disaster assistance when there is an actual problem, I am not big on buying insurance for hazards that are not statistically risky. There are already enough expenses that you should be taking care of to try to provide for those that are not statistically likely. You will have to make that decision for yourself if you actually get the option of dropping it. Don’t expect to get a notice from your mortgage company notifying you that the coverage is no longer required. They are reasonably acting on whatever information was provided when you closed on the loan. It will be up to you to look to see if this can be accomplished.

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