Assuming 1 month in 12 vacancy (assumes it is a nice property, not a dump), you have a 15.8% annual return. Less after maintenance, and your expenses, but still excellent. Again, I assume good property and renters with modest amount of hours on your part, on an annual basis.
I am guessing that the depreciation for flood zone is built in. Therefore, if you are a good property manager, you maybe want to develop a business of several doors, and then when you sell, you could sell x doors for a total amount (including good renters in place, with a good history).
Your business would be purchased for the cash flow, and what you get would be discounted for the buyer's perceived risk regarding the flood zone. You perceive the risk to be low. Would everyone else?
So your risk is the investment going to zero before 7 years are up (or losing all your tenants and cash flow). Seems like a good business risk to me.
Anyway, I would plan to eventually sell this as a business with a set cashflow for modest input of annual maintenance and effort, that returns over 15% on the capital dollar invested, with potential for capital appreciation ( you may get smaller less vacancy rates when you have more doors).
