I had a rental property flood (not in a flood zone, no flood insurance) several years ago. What happens will depend to some extent on what FEMA decides to do. In some cases they will basically bail everyone out and cut checks for repairs - but that *tends* to only be for owner occupied residences. They will offer very low interest loans through the SBA if your sister can't afford repair costs up front.
In our case since we didn't live in the property, we were offered some loans (which we declined to do) and ended up spending about $10k on new drywall, drying the studs very thoroughly, applying some sort of anti-mold spray, reinsulating, and re-drywalling/painting. Luckily it was only the lower level of a small condo so total costs were about $10k. Not too terrible.
There may be state/city/county funds that become available going forward as well, but *most likely* she is on the hook for repairs. This is why professional RE investors have a lot of "shit happens" leeway built into their 50% rule/1% rule sort of numbers when they evaluate a property.
-W