Lead, Asbestos, K&T, and bears oh my!

[Ryan Walker]

Hi BP!

I'm a new investor in the Massachusetts area and I'm curious as to if any of you have experienced a similar situation as the one I am going through right now. I have noticed in my search for an investment property that much of the inventory in the Massachusetts area consists of older properties. Personally, I love the intricate details and quaint ornaments that were an integral part in the construction in the 1900's, however, I'm not particularly fond of the fact that the technology utilized in these apartments don't quite cut it now-a-days. 

I am in the process of purchasing a 3-family home. Each unit is 1200SF and has 3 bedrooms, 1 bath, a kitchen, dining room, and a living room, with complete access to the basement. It's in a good area, the rent demand is good with promising comparables, and my purchase price less improvements is around 75% of ARV (which I'm happy with as I will be buying and holding). It is currently vacant except for the owner with the contingency that it will be vacant when I purchase it (I get to choose my own tenants). I have money budgeted for the repairs. The purchase price has been accepted and the inspection is scheduled for this week. I have the option to back out if I find anything that I'm not expecting. The P&S is to come next week and the closing isn't for another month and a half (the owner needed more time to move out).

My issues are the following: 

Lead Paint: I'm assuming that the house has lead paint as it has hardly been touched since it was built in 1900. The house has never been inspected for lead paint, and what I can understand from the law is that if it has not been inspected it is "free game" to gut any trim / windowsills etc that might contain lead paint myself and not hire a licensed lead abatement company. This seems like a loophole in the system and I would hate to get hit with a huge fine by working around the law, however, the costs for lead abatement is huge and I'd rather mitigate any future risks and operating costs by completely eliminating the lead rather than just encapsulating it and handing a waiver to my tenants. Thoughts?

Asbestos: I plan on replacing the (3) old oil-fired steam boiler systems with newer higher efficiency natural gas burners with conventional baseboard (steam conversion). It appears as the steam pipes are wrapped in asbestos insulation in the basement, and I'm wondering if wrapping the insulation is sufficient in terms of lawsuit risk as long as I restrict access to these areas to tenants.

Knob & Tube Wiring: I also plan on providing electrical resiliency and fire protection by replacing the existing Knob & Tube wiring. Here's where it gets tricky; I'm using a masshousing loan to finance the property and I'm also worried about the insurance falling through. From what I've read it sounds as if insurance companies will not cover properties with this type of wiring. Has anyone experienced a situation like this? I'm wondering if there is a possibility that the lender and insurance provider can still give me commitment with a contingency that I fix the electrical within 30 days after closing.

I'm sure most of these questions are positioned for a real estate attorney, but it would be helpful to hear if anyone has experienced some of the same hurtles that I have and could provide me with some insight. 

Thanks!

-Ryan