Updating Electrical Wiring in MFH

[Kevin Brenner]

I purchased a Quadplex in August knowing that it still ran off of original fuse boxes and was outfitted with cloth covered wiring.  I consulted with an electrician during my due diligence to ensure that this would not be a serious problem.  While they are safe, the cloth wiring only allows for a few grounds in each unit (kitchen, bath, living room).  I was thinking of replacing the fuse box with modern breakers and putting GFCI outlets in the kitchen and bathrooms according to code.  I'm worried about the inspector coming through and saying my cloth wiring is no good and I have to rewire the entire building (easily a $20K expense, maybe more).  On the other hand, I want to offer my tenants not only a safe place to live, but also a home that has enough 3 pronged outlets to serve their needs.  

Does anyone out there know if there is a happy medium between rewiring an entire Quad and grounding portions of the house to at a minimum add enough 3 pronged outlets for modern use?  I've consulted an electrician and got a quote of $2K without materials (approx another $500).  Does anyone have experience in this arena?  Thanks in advance!