12 Sep 2022
 | 12 Sep 2022
Status: this preprint is currently under review for the journal NHESS.

Freeboard Life-Cycle Benefit-Cost Analysis of a Rental Single-family Residence for Landlord, Tenant, and Insurer

Ehab Gnan, Rubayet Bin Mostafiz, Md Adilur Rahim, Carol J. Friedland, Robert V. Rohli, Arash Taghinezhad, and Ayat Al Assi

Abstract. Flood risk to single-family rental housing remains poorly understood, leaving a large and increasing population underinformed to protect themselves, including regarding insurance. This research introduces a life-cycle benefit-cost analysis for the landlord, tenant, and insurer (i.e., National Flood Insurance Program (NFIP)) to optimize freeboard (i.e., additional first-floor height above the base flood elevation (BFE)) selection for a rental single-family home. Flood insurance premium; apportioned flood risk among the landlord, tenant, and NFIP by insurance coverage and deductible; rental loss; moving and displacement costs; freeboard construction cost; and rent increase upon freeboard implementation are considered in estimating net benefit (NB) by freeboard. For a 2,500 square-foot case study home in Metairie, Louisiana, a two-foot freeboard optimizes the combined savings for landlord and tenant, with joint life-cycle NB of $23,658 and $14,978, for a 3 % and 7 % real discount rate, respectively. Any freeboard up to 2.5 feet benefits the tenant and NFIP, while the landlord benefits for freeboards up to 4.0 feet. Collectively, results suggest that at the time of construction, even minimal freeboard provides substantial savings for the landlord, tenant, and NFIP. The research provides actionable information, supporting the decision-making process for landlords, tenants, and others, thereby enhancing investment and occupation decisions.

Ehab Gnan et al.

Status: open (extended)

Comment types: AC – author | RC – referee | CC – community | EC – editor | CEC – chief editor | : Report abuse
  • RC1: 'Comment on nhess-2022-222', Anonymous Referee #1, 14 Sep 2022 reply
    • CC1: 'Reply on RC1', Ehab S Gnan, 12 Oct 2022 reply
  • AC1: 'Comment on nhess-2022-222', Md Adilur Rahim, 29 Nov 2022 reply

Ehab Gnan et al.


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Short summary
This research provides a method of identifying the economically optimal elevation of single-family homes at the time of construction. A case study 2,500 ft2 home suggests that elevating by two feet is wise, with an investment of $10,403 saving $21,572, at a 7 % discount rate. Flood premium savings is $15,536 while adding $52/month on a 30-year mortgage at a 3.375 % rate. NFIP insurance premium decreases by $107/month. The research is a first step in ensuring greater resilience to the flood hazard.