To update Knob and Tube... or not?

9 Replies

Hi BP friends. I’m going to be closing on a property that requires the entire home to be upgraded from knob and tube. 

Here’s the numbers 

Purchase Price $44K

Knob and Tube upgrade $13K

Insurance premium $2246/year (with k & t- usually around $1200 without)

Rental income $1100/month

I'm a buy and hold type of person. Why question is whether to upgrade the knob and tube now or leave it. I'm aware it's difficult selling the property with it in however I wouldn't plan on selling it anytime soon and can do it later.

My gut says do it now and be done with it. 

Thoughts? Thanks in advance 


I think it depends on a few things. If the walls are going to be open and gutted it is a no-brainer. If there is accessible knob & tube that a tenant can get their hands on, same thing. If the circuits are overloaded, same. If there's obvious insulation break-down and bare wires exposed to rafters, joists or wall studs, same.

Since you are planning to keep it, and you make your money back on your insurance, it's probably not a bad idea although I would shop around on some pricing. I don't know where you are in Ohio but where I am in TN I can have a whole house wired, if the walls are open, including service panel, for around $5k depending on house size. I had one of my properties that had a mix of K&T without open walls rewired for $1600 which hit everything except the attic/overhead lights. So you might want to get some other pricing. 

@Greg Gangle I do typically update all my properties. It’s safer, cheaper, fewer maintenance issues, etc. plus, when you do decide to sell, you’re going to have to do it anyway (or pay for it), so why not reap the rewards of it now?

Most electricians can do it without many holes, and the ones they do make can be patched. Ceiling lights on the first floor (or 2nd with no attic) are the hardest, but again, a few holes that need patching.

Unless you plan on renting it as is, I’d bite the bullet and do it. If you’re repainting anyway, it’s an extra day for the painter to patch the holes anyway.

Originally posted by @JD Martin :

I think it depends on a few things. If the walls are going to be open and gutted it is a no-brainer. If there is accessible knob & tube that a tenant can get their hands on, same thing. If the circuits are overloaded, same. If there's obvious insulation break-down and bare wires exposed to rafters, joists or wall studs, same.

Since you are planning to keep it, and you make your money back on your insurance, it's probably not a bad idea although I would shop around on some pricing. I don't know where you are in Ohio but where I am in TN I can have a whole house wired, if the walls are open, including service panel, for around $5k depending on house size. I had one of my properties that had a mix of K&T without open walls rewired for $1600 which hit everything except the attic/overhead lights. So you might want to get some other pricing. 

Great advice! Most of the investment properties in Columbus, Ohio have knob and tube. Insurance agent WILL insure them at a small markup. If they tell you otherwise you are using the wrong insurance agent.

I upgrade my electrical whenever I renovate my units.

Thanks everyone. I'm highly leaning towards to doing it and being done. It's plaster walls and there will be some holes that will need patching. I bought it below market value for this very reason. If I ever want to pull equity out at a later date this is a good selling point.

As an insurance agent, I can tell you it's imperative to update.  Not only because of the safety, but because the list of available companies that insure knob & tube is tiny and because they are taking on the 1800's technology risk, they are likely going to charge you for it.

The upgrade will likely cost a bit but your place will be more marketable and also, all in all, safer.  

Good luck,

Andrew

Greg, From an insurance perspective, we have over 40 Markets for Homeowners & Dwelling Fire Insurance and only one will consider Knob & Tube (and only if it is a limited percentage of the wiring) or Aluminum wiring. I find that when the coverage is gotten from the excess/specialty markets the coverage is often less and the exclusions more than what you would get in a standard policy. I would check the coverage on the two Insurance options and see if they are equivalent. Its possible you are paying double for less coverage
Originally posted by @Greg Gangle :

Hi BP friends. I’m going to be closing on a property that requires the entire home to be upgraded from knob and tube. 

Here’s the numbers 

Purchase Price $44K

Knob and Tube upgrade $13K

Insurance premium $2246/year (with k & t- usually around $1200 without)

Rental income $1100/month

I’m a buy and hold type of person. Why question is whether to upgrade the knob and tube now or leave it. I’m aware it’s difficult selling the property with it in however I wouldn’t plan on selling it anytime soon and can do it later. 

My gut says do it now and be done with it. 

Thoughts? Thanks in advance 


 In my market you're only required to replace what is exposed. This is the route the majority of folks go.