Investor · Terre Haute, IN · Member since 2015 · 55 posts · 8 votes
So as the title says I am looking at a great property with long term tenants already in place so the property is truly turnkey and the price is right. However I have a suspicion that the property may still be fully knob and tube but won't know for sure until the inspection is done. I'm fairly certain I won't be able to get it insured if I am correct about the knob and tube but I wanted to get opinions from people more "in the know" than myself. Thanks in advance.
Inspector · Freeport, NY · Member since 2013 · 136 posts · 36 votes
10y
As a home inspector, if the home has knob and tube wiring, I would say you need to budget for a total replacement of the electrical system. Aside from the fact that you may not be able to get it insured, it is a major safety issue that you dont want to be putting yourself into. You likely know this already,but it needs to be upgraded as it IS a fire hazard. Make our decision wisely.
Inspector · Freeport, NY · Member since 2013 · 136 posts · 36 votes
10y
As a home inspector, if the home has knob and tube wiring, I would say you need to budget for a total replacement of the electrical system. Aside from the fact that you may not be able to get it insured, it is a major safety issue that you dont want to be putting yourself into. You likely know this already,but it needs to be upgraded as it IS a fire hazard. Make our decision wisely.
Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes
10y
Whether or not you can get it insured, I do not know. If so, your premiums would probably be ridiculously high. Also, if you plan on financing, you will want to check and see if your lender will even finance a property like this. Either way, plan on replacing the electrical.
Investor · Terre Haute, IN · Member since 2015 · 55 posts · 8 votes
10y
Thanks guys. I agree the electrical does need upgraded but it may be a deal killer as I have no interest in paying for it myself. The main reason I am curious about insurance availability on k & t wiring is because it would be a very good motivational tool to get the seller on board with handling the replacement costs if I could tell her that she might as well replace it now or else she is just going to have to hope someone with all cash and no interest in having the property insured comes along and buys it. Given the price point of the property I don't anticipate there will be any cash buyers so obviously that would mean she either upgrades the electrical or holds the property since no one will be able to secure a mortgage without insurance.
Thanks guys. I agree the electrical does need upgraded but it may be a deal killer as I have no interest in paying for it myself. The main reason I am curious about insurance availability on k & t wiring is because it would be a very good motivational tool to get the seller on board with handling the replacement costs if I could tell her that she might as well replace it now or else she is just going to have to hope someone with all cash and no interest in having the property insured comes along and buys it. Given the price point of the property I don't anticipate there will be any cash buyers so obviously that would mean she either upgrades the electrical or holds the property since no one will be able to secure a mortgage without insurance.
Hi Alan (and all)!
Speaking to the insurance piece, yes, typically a carrier will not want a property to have knob and tube wiring. I can't speak to all insurers out there of course, but the policies that I have seen have excluded coverage for properties that have this type of wiring in place. Also worth mentioning is that some insurers may also have restrictions on aluminum wiring as well. The policies I've seen thus far have been ok with it being present as long as it's "pigtailed." Otherwise coverage has been excluded for homes with aluminum wiring as well.
As Barry stated, knob and tube IS a big fire hazard and should be replaced. If anything, the current owner should be concerned about the residents she has in there now.
Case in point, we just saw this loss a few days ago with a young family who ended up on life support from a fire caused by the improper connection of knob and tube and Romex wiring. The other horrible part about this incident is that allegedly there were NO smoke detectors installed. Here's the news story:
That is a type of risk no one should take as it could cause not only serious property damage, but can endanger the lives of one's tenants too. I don't think anyone would want to be responsible for the death of a family because they failed to upgrade an electrical system.
Good luck and I hope that the current owner thinks seriously about upgrading the electrical soon!
Investor · Terre Haute, IN · Member since 2015 · 55 posts · 8 votes
10y
Thanks so much for the reply @BreAnn Stephenson. I agree wholeheartedly that the potential for injury or even loss of life is much more troubling than loss of property. It's really a shame because apart from this issue the duplex is a wonderful property with tons of potential but the price for aquiring it as it stands makes it prohibitive to sink another 12k into it for rewiring. Thus the need for the seller to bite the bullet and do the work. Thanks again for your input!