Help analyzing knob & tube

[Molly Ronan]

If you don't want to read the whole post - I would love to hear your experiences with knob & tube wiring. 

Hi everyone, I need your advice on a 3-family I have under contract. 

$313k offer, was listed for $295k - my market is very competitive right now for multi families. And this property was listed under what I think its worth - comps were at my offer. It is 3,500 square feet, 3 bay garage and shed. Each unit is 3 bedrooms, with kitchen, living room, dining room, and in unit laundry. 

I would househack and live in the top floor and rent out one of the bedrooms there for $500.

There are long term tenants in the first and second floors with rents well under market value. Eventually I would be able to get $1500 per unit. Right now I would be making about $1k per unit after I raise the rents. 

I would cash flow about $100 right now while living for free. 

Issues with the house:

1. A lot of active knob & tube - the whole house would need to be redone eventually. Electrician quoted 30k to 50k - no attic so both ceilings and walls would need to be opened. 

2. Old snowman boiler that would need to be replaced - we do have a lot of state programs to help with that 

Good news is I already found an insurance agency who will cover it - $3100 for the year. No requirements to upgrade. (right now, but who knows with insurance agencies)

My questions:

1. Do I walk away? This house is at the top of my budget. I don't have enough right now for the big repairs. But it sounds like they aren't urgent anyways. 

2. How much do I negotiate with the seller after inspection? 

A bit about me if it helps. I already own a 3-family fully rented with one problem tenant - cash flows very well. Im living with family right now. If I don't end up with this house, I will either find somewhere to rent or try to move into my other unit.

Thanks guys!