BLINDSIDED! A TRUE NIGHTMARE KILLS a Real Estate Deal for my neighbor.
Last Tuesday, my next door neighbors invited me and Beth out for dinner at a new upscale restaurant in the “NuLu” part of downtown Louisville. (little did we know the University of Louisville basketball team had a game to play at the YUM center. Traffic was horrible.) They wanted to pick my brain about real estate investing and setting up Self Directed Roth IRAs for their two young sons.
This restaurant takes pride in all menu items are from local producers, including beer and wine. For the first time in over 25 years, I had myself an ice cold Pabst Blue Ribbon beer. It tasted pretty good, but not good enough for me to switch back from an occasional Bud Select here and there.
My next door neighbors, Heidi and Sean arrived and were visibly upset. They proceeded to tell me about the bad news they received that morning.
Heidi and Sean were selling their previous home, a nice home with a great view overlooking the Ohio River. After almost of year of trying to sell this unique river home, they finally got a buyer to purchase their previous home for approx. $225,000 AND their closing was scheduled to place this Friday.
Just 4 days before their scheduled closing Heidi gets a phone call reporting their buyers can not qualify now for their previously approved loan.
Because of some new, hidden until now, federal regulations involving flood insurance and FEMA, the flood insurance on this property had increased almost 1,000% overnight!
Yes, when Heidi and Sean owned this home, their flood insurance was about $3,000 a year.
Their Flood Insurance Premium is $23,000.
This can not be true!
What in the world is going on?
What about Real Estate Investors and Homeowners?
What gets my goat is how this new flood insurance pricing program “snuck up” on me, you, Heidi and Sean.
FYI, Heidi owns not one, but 3 Keller Williams offices. One in Louisville, another in northern Kentucky, and a third in southern Indiana.
Heidi is very involved in the real estate market and she was blindsided by this. Not a word in advance from our market industry watchdog groups. (I won’t name any group, but you know what I mean)
Here is the link from National Association of Realtors on this new flood insurance reform act
This is Part 1 – too much to write here.
Part 2 – some research reveals what is going on
Part 3 – new opportunities for creative investors
What are your thoughts?