Property Manager · New Orleans, LA · Member since 2013 · 184 posts · 34 votes
Hey BP world!! I am happy to say I am officially under contract on my first property!! The property was a succession sale that I got at a great deal. The property was inspected today and the inspector discovered that all of the wiring is aluminum. Any of you savvy investors out there have any suggestions on how to deal with aluminum wiring? I know of all possible remedies, but my main concern is insurability. Since the inspection was preformed late on a Friday afternoon, I was not able to contact any insurance companies. I spoke with the listing agent about the possibility of the owner subtracting the cost of rewiring the house from the sale price, but he is not willing to do so due to the fact that it was already discounted a lot and that there are 4 backup offers ready and waiting for my deal to fall through. I'm open to any and all suggestions.
It's called a Copalum repair to pig tail aluminum wire with copper ends. As others have mentioned already, Aluminum wire itself is safe, just not the connective ends. The CPSC (consumer product safety commission) endorses pig tailing the connections as the acceptable remedy. This should only cost $1-2k with a licensed electrician.
Aluminum wiring is great wiring nothing wrong with it, and if it was airplanes would not use it. I am shock you would ask for a better discount sense you said you got a great deal.
That probably won't be a deal breaker. There are receptacles (outlets) and switches that are designed to work with aluminum. Talk to some local investors and try to get a referral for an experienced electrician to take a look at it. (when I say experienced I mean someone with 25 years experience that has dealt with it before) I would also ask the current owner who he is insured with. Start by getting a quote from them. It might be a lot easier since they already know a lot about the house. If they will insure it then you can shop around with the peace of mind of knowing that you already have a company to do it.
Aluminum wiring is great wiring nothing wrong with it, and if it was airplanes would not use it. I am shock you would ask for a better discount sense you said you got a great deal.
Joe Gore
I'm shocked you'd say there's nothing wrong with it! It's uninsurable and the house needs complete rewiring to be insurable and sellable to a retail buyer.
That probably won't be a deal breaker. There are receptacles (outlets) and switches that are designed to work with aluminum. Talk to some local investors and try to get a referral for an experienced electrician to take a look at it. (when I say experienced I mean someone with 25 years experience that has dealt with it before) I would also ask the current owner who he is insured with. Start by getting a quote from them. It might be a lot easier since they already know a lot about the house. If they will insure it then you can shop around with the peace of mind of knowing that you already have a company to do it.
Congrats and good luck!
I'll bet the owner (and the owners insurance company) don't know they've got AL wiring.
May not be able to get insurance it but there is nothing wrong with Aluminum wiring.
Joe Gore
I'm sure it has its place but there's a reason it was short lived in residential applications and is generally uninsurable. In airplanes they probably use stranded, in residential it was solid and that was a large part of the problem.
Aluminum wire is actually not up to code in residential housing in my area. I'm sure codes are different all throughout the country, but as for this particular city , aluminum wiring is not up to code. In doing some research I have found that aluminum expands and contracts due to heat which over time can lead to loose or faulty connections where the aluminum connects to the outlets, which in turn may lead to fires. This is the reason some, if not most insurance companies will not insure a home that has aluminum wiring. I have been told that rewiring an entire house of this size could cost upwards of $15k. $15k of unexpected costs in any deal I feel is worth negotiating for. Especially considering at this point if I terminate the deal, the owner will have to repair it himself or compensate the next buyer for the expense. I was just curious if anyone on here has had any similar experiences.
As you know, there are three main ways to repair it without doing the whole re-wiring method. Any of these would probably appease the insurancer, but the main problem I have seen is with it is the resale value. Some people don't want it, even if it has been remedied. I would either have him rewire (which he said he won't) or walk. I am a home inspector, and any time I see houses built in that time period, I get worried until I check it out. Most I have seen either did not have it or were re-wired.
@Troy Sheets any suggestions? Of course I am having an electrician come out for an estimate, but I didn't know if there was an option I may be overlooking. There is a way to make aluminum wiring safer by pig tailing the ends with copper, but because I have to disclose this with a potential buyer and the insurance company, they will still not insure due to the presence of aluminum still in the walls.
A lot of things aren't up to code but you usually don't have to bring it up to code unless you do permitted work. A friend of mine recently bought an 18 unit apartment building with aluminum wiring. He got it insured.
@Troy Sheets any suggestions? Of course I am having an electrician come out for an estimate, but I didn't know if there was an option I may be overlooking. There is a way to make aluminum wiring safer by pig tailing the ends with copper, but because I have to disclose this with a potential buyer and the insurance company, they will still not insure due to the presence of aluminum still in the walls.
It's a gamble. You can do nothing and hope your buyer doesn't catch it, you can try pig tailing and hope the stigma doesn't kill the sale and/or that the end buyer can get insurance or you can budget for rewiring. Personally, I'd budget for rewiring and if the deal doesn't work you walk. You rarely lose money on a deal you walk from.
It's called a Copalum repair to pig tail aluminum wire with copper ends. As others have mentioned already, Aluminum wire itself is safe, just not the connective ends. The CPSC (consumer product safety commission) endorses pig tailing the connections as the acceptable remedy. This should only cost $1-2k with a licensed electrician.
Still gathering info. I have found out though, that there are a few insurance companies willing to insure the property as long as it has been repaired using the pig tailing method and the property is placed on a maintenance contract. Rewiring the home is not an option for me as the quote I received yesterday was $16,500, which does not include repairing the drywall that will be damaged in the process. I am still debating whether it is worth the risk of potential buyers possibly being scared away due to the number of insurance companies Not willing to insure it. My due diligence period ends tomorrow.
Still gathering info. I have found out though, that there are a few insurance companies willing to insure the property as long as it has been repaired using the pig tailing method and the property is placed on a maintenance contract. Rewiring the home is not an option for me as the quote I received yesterday was $16,500, which does not include repairing the drywall that will be damaged in the process. I am still debating whether it is worth the risk of potential buyers possibly being scared away due to the number of insurance companies Not willing to insure it. My due diligence period ends tomorrow.
Let us know what you decide. Can you discount the ARV knowing you may have to hold it a bit longer and it may be on the market a bit longer? There's a buyer for every house, it just comes down to finding that one right buyer at the right price. If you're on thin ice with the deal already maybe it's a no-go, if you've got time and money to hold it and lower the price if need be it could still be a winner. Best of luck whichever way you go!
I would put in a formal request to the seller for the sales price to be changed. It's a great deal NOW. Is it a great deal when you add $15,000 worth of repairs to it? Who made the back up offers, investors gutting it or first time home/residential buyers?
Personally for my first few houses I stayed away from issues that would affect resale. If this was your 10 house I would say go for it. As your first, you really still have the kid gloves on.
The owner is not willing to drop the price for the total rewire. He will however, cover the cost of pig tailing the wires. I put the ARV at $130k, but I know I am being very conservative. A similar comp sold for $137k less than 60 days ago and they have an active comp that is slightly bigger listed for $159k. I can also rent the property very quickly for $1300, possibly more. I am waiting on a few insurance quotes now. If they come back at a reasonable premium, then I will consider moving forward.
The accepted offer is $82k. My contractors estimate is around $19k to completely update the home. Including new kitchen and bathrooms. I will also be the realtor on both ends of the sale as well.
Hi Michael, I am a licensed electrical contractor in San Diego and have been for 20 years. We have a lot of aluminum wiring through out SD and I do sometimes get called to pig tail all plugs out with copper in order to pass a home inspection. The only unsafe part of the wire is where the connections are made to plugs and the breakers. I cant speak to your area of the country but I have yet to hear that homes are not insurable with aluminum wiring in my area.