Knob and Tube Wiring on 3 Unit Properties

[Raymond Hill]

Hello BP Family,

I just got a home inspection for a 3 family property and found a few items that I want your advice on a property I just had a home inspection on in Woonsocket, RI.

1.) The seller was told that there is knob and tubing wiring and it is 99% inactive. Come to find out, the inspector stated that the knob and tube wiring throughout the property is 99% if not 100% active and needs a junction box and fix some of the splicing. 

2.) The 1st floor bathroom has significant water damage to the drywall in which I will need to put in a new bath fitter and repair any and all moisture damaged areas. 

3.) Install new gutters and downspouts around the house. 

Just to add context the property is fully rented 1st unit 2 bed 2 bath rent: 895 2nd unit 3 bed 1 bath rent: 995 3rd unit 3 bed 1 bath 720. The 3rd unit needs some cosmetics repairs, nothing immediate. Other 2 units are in good condition.

Thoughts?

[Anthony Thompson]

@Raymond Hill the active knob and tube is probably your biggest challenge there. It might prevent the bank from being willing to do the loan, it will almost certainly cause you difficulty getting insurance, and it’s just a big liability for you in general. That alone could kill the deal right there just because of the financing & insurance impact.

Depending on your appetite for risk, if you really love the property/deal and the bank doesn’t specifically ask about knob and tube (and their appraiser doesn’t notice it), you could possibly close and then immediately (like day of/after closing) begin rewiring the entire property. But that’s still risky, and not a cheap project at all, and obviously you’d have to have enough cash to pay for that separately since you won’t be able to finance that repair :)

(And I’m not telling to do that, at all, I’m just talking generally about what you could do. Consult with your own attorney & advisors before taking advice from the Internet, of course :D)

As far as the other two items, I’d say just get quotes on the work and either negotiate with the seller if possible, or adjust your purchase price accordingly. I always recommend factoring in the more expensive solution, and rounding up, and then if you do go forward with the purchase to see if there are any cheaper (but still acceptable) ways of fixing the problems (e.g., maybe not all gutters and downspouts need to be replaced).

You do want to make sure with #2 though, that you fully understand what the source of the problem is/was so that you’ll be fixing the source of the problem and not just treating a symptom. And you also want to be sure that, depending on how long the problem has existed, that there hasn’t been mold growth far beyond the visible area of the problem. You can search for “detect mold in drywall” to get a sense of some options for investigating that.