Knob and Tube in otherwise very clean property, What Would You Do?

Question

I would like to lay out a scenerio for a property that I am closing on in the next few weeks (hopefully, we have a final approval for SS) and hear what other buy and hold investors have to say.

Backstory- My normal bread and butter property in this area is badly distressed, total rehab (all mechanicals and cosmetics). The property in question is a very light if any rehab. The knob and tube all appears to be in great shape in the basement.

The property is a legal duplex, with a 3rd unit in attic with 2 egress exits. I will not be renting it illegally- the area has 3 units and it is likely I could change property from legal 2 to legal 3 fam, but that will be decided based on tax consequence compared to potential rent from 3rd unit. Other problem is the 3rd floor has electric baseboard heating which may not mater if I decide to seal it up.

The 2 units are both in very clean shape, totally turn key, however the home is wired with knob and tube which would normally be totally removed. However the first floor is rented with a long term tenant who has invested in decent appliances and furniture so probably will want to stay for foreseeable future- but they are about 20% under market rate for rent, and are month to month.

So-

Do I:

1. terminate the tenants lease rewire the whole building top to bottom?

2. rewire the second floor (and maybe 3rd if I am going to use it or for potential future use)

3. Keep the knob and tube in the building

Matthew Paul · Answer

If ti has a basement , a good electrician could re wire by fishing wires thru the wall from the basement with little or no damage , even while the tenant is there. definatly go with seperate panels AND  meters . The second floor would be a challenge , but could be done

Matthew Paul · Answer

Does it have 3 meters?  if so it may be legal , someone had to get a permit , the 3 rd may be on that permit

Michaela G. · Answer

you've gotten good advice on the wiring.

You mention that it's legally a 2-unit house and that there's a 3rd unit and you might use it in the future.

Check your local ordinance on 'grand fathering'. That is different between different states/counties.  In Atlanta, even if something is zoned for duplex, if the 3rd unit has been in usage then it's grand fathered. But if it's ever vacant for more than a year, the grandfathering will be cancelled and it will revert back to duplex zoning.

So, check and if you have grandfathering, don't wait too long to put a tenant in

Adam Johnson · Answer

I question the need to move the tenant out.  A couple days of inconvenience might be worth the peace of mind knowing that they are in a safer home.  I would definitely look to eliminate all of the knob and tube asap.  This might also be good reason to justify a rent bump to the existing tenant.  Let them price shop, if you are bumping your rent to market AND they don't have to move AND you are showing that you are spending money on improving where they live, you might get to have your cake and eat it too.

Regarding the destructor electrician - get more quotes.  Just because the electrical price is lower, you may be spending more fixing his hack work.  You may also want to consider wire moulding to stay outside the walls.  Check code on this and be aware that it isn't that attractive, but if code allows it and it is in a C/D neighborhood, it may not be as big of a concern as a safe place to go to sleep at night.

Jerry W. · Answer

I would definitely rewire.  Using knob and tube is an accident waiting for a place to happen.  I doubt I could get insurance on it.  If you rewire do it all.  If your tenant is willing to stay and have them work around him fine, if not have him move.

Steve Wilcox · Answer

Sorry some more info I forgot-

Property already has separate meters, separate panels, and is on breakers.

This property is in a c- or d+ area but a c neighborhood.

I have not gotten formal quotes for the work yet, but I normally pay about 6-8k for total rewire, but my electrician is a destructor. I am assuming I will be able to do the 2nd floor for about 5k, and the third for another 1.5k or so if I tack it on the original job. Problem is I now need to patch and paint

Roy N. · Answer

Wow!  Around here you would have never passed the inspection if you upgraded to modern (breaker) panels and left the knob-n-tube in service.

Was this work done under permits?

Roy N. · Answer

@Steve Wilcox

I presume you have already checked with your insurer and they are fine with the knob-n-tube?

Would it also be safe to assume the entire building is on a single electrical service?  Around here it is rare to find a duplex where units would have been wired separately back when knob-n-tube was in-use.

I would definitely plan to rewire the entire building.  Regardless of whether the knob-n-tube is in good condition or not, it is and ungrounded service that was never designed to handle modern electrical loads.   If you are lucky, you will find 2-4 circuits per unit - we've found a buildings with as few as 2 ... one for the kitchen, one for everything else.   You may also have a hybrid where newer circuits have been added over the years.

How about rewiring the second (and third if you choose) floors placing them on their own panels and bring in separate entrances for each unit.  You could then temporarily relocate your long-term tenant to the second floor while you re-wire/renovate their unit.

Knob and Tube in otherwise very clean property, What Would You Do?

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