Older dupex as Owner-Occupied STR
NASHVILLE, TN · Member since 2020 · 3 posts · 1 vote
Older dupex as Owner-Occupied STR
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Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
4yJust from my experience in buying/renovating homes....and with the very limited knowledge I have on this deal:
One of the most important aspects to knowing what a house needs is the age of the home.
Since it was built in 1945, your electrical is aluminum wiring-assuming it was never updated. If the connections are done right and haven't come loose this is typically okay. For the most part aluminum wiring is not ideal and can be a fire hazard, especially if the connections have not been done properly. A friend of mine who is a firefighter said aluminum wiring is a major fire problem....but he is a firefighter and sees the worst of the worst.
You also most likely have galvanized plumbing pipes-again, assuming it was not updated. If it's built in 1945 then it has reached the end of its service life and should be replaced with PEX.
In terms of the cracks....the soil in TN sucks. That's why we have so many foundational repair companies. My assumption is those are foundational issues and not cosmetic. You're looking at $700-$1300/ foundational pier and they need to put 5ft apart from one another.
Everything I mentioned-electrical, plumbing, foundation may be just fine for the next 10 years, it may fail on you tomorrow. There's no telling. I'm just giving you a few things to think about based on my experience. Older homes carry more risk and you should know the risk going into them. With that said, if you have priced this into your purchase then it really shouldn't worry you. If you are paying full market value for a turn key home, then that's a different story.
14 Replies
- 4yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
As long as the foundation cracks are cosmetic.
What type of wiring is it? ungrounded copper maybe?
- 4yChristian EhlersBusiness MemberReal Estate Agent · NH & MA · Member since 2021 · 457 posts · 291 votes
If everything is safe and won't affect a guests experience I wouldn't think its a reason you couldn't use it to Airbnb. Anything that could cause harm or problems for a guest I would get resolved though. Congrats on getting your first Airbnb/househack under contract, I got my first one at 23 as well!
- Investor · Nashville, TN · Member since 2022 · 22 posts · 9 votes4y
Hi Adam,
Congrats on looking at your first investment! I'm also in Nashville and will be purchasing my first property in November. I'm new to the game too, but here's my advice: get a structural inspection if you are really worried. Hopefully these are non-structural shrinkage cracks...but just in case, the inspection may protect you against repair or insurance issues down the line, and may even be a useful bargaining chip for negotiating home price.
If the seller is slippery, you can also ask your real estate attorney about writing in a $2k "cost of repair contingency". This means that if the inspector declares that the repairs will cost $2k or more, you can walk away from the deal without any financial consequence.
- Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes4y
@Adam Johnson, I agree with Justin's advice, when in doubt get a professional out there to assess the cracks. Most structural engineers will get you a free report/estimate if repairs are needed. Use that report as leverage to negotiate a price reduction or some sort of seller concessions. Sometimes small cracks can mean nothing, other times the issue is bigger than anticipated. The point is, that you won't truly know until you get an expert opinion. Hope this helps!
- Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes4y
Just from my experience in buying/renovating homes....and with the very limited knowledge I have on this deal:
One of the most important aspects to knowing what a house needs is the age of the home.
Since it was built in 1945, your electrical is aluminum wiring-assuming it was never updated. If the connections are done right and haven't come loose this is typically okay. For the most part aluminum wiring is not ideal and can be a fire hazard, especially if the connections have not been done properly. A friend of mine who is a firefighter said aluminum wiring is a major fire problem....but he is a firefighter and sees the worst of the worst.
You also most likely have galvanized plumbing pipes-again, assuming it was not updated. If it's built in 1945 then it has reached the end of its service life and should be replaced with PEX.
In terms of the cracks....the soil in TN sucks. That's why we have so many foundational repair companies. My assumption is those are foundational issues and not cosmetic. You're looking at $700-$1300/ foundational pier and they need to put 5ft apart from one another.
Everything I mentioned-electrical, plumbing, foundation may be just fine for the next 10 years, it may fail on you tomorrow. There's no telling. I'm just giving you a few things to think about based on my experience. Older homes carry more risk and you should know the risk going into them. With that said, if you have priced this into your purchase then it really shouldn't worry you. If you are paying full market value for a turn key home, then that's a different story.
- Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes4y
Adam,
If the house has Knob & Tube or Aluminum wiring many Insurance companies will not write it. I would verify you can get coverage without replacing the wiring. Check with your insurance agent. If you are not dealing with an independent agent that represents multiple companies, you may want check with one and get some other options.
- 4yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
I seriously doubt it has aluminum wiring if built in 1945. You are right on the cusp of knob & tube vs 2 pole early Romex. Aluminum wiring really took off in the mid 60's.
If it has never been touched, you will need to do a full rewire of the house IMHO. 100 amp panel per side or ?
Dumping money isn't always a problem if you get the credit for the costs during negotiations.
Did you check to see if STR's are even legal in your area? Nashville has a lot of restrictions.
- NASHVILLE, TN · Member since 2020 · 3 posts · 1 vote4y
Quote from @Michael Baum:
I seriously doubt it has aluminum wiring if built in 1945. You are right on the cusp of knob & tube vs 2 pole early Romex. Aluminum wiring really took off in the mid 60's.
If it has never been touched, you will need to do a full rewire of the house IMHO. 100 amp panel per side or ?
Dumping money isn't always a problem if you get the credit for the costs during negotiations.
Did you check to see if STR's are even legal in your area? Nashville has a lot of restrictions.
I’m not sure I’ll move forward with it as the owner isn’t partial to negotiating much about the issue.
I did check codes before doing anything and because it would have been owner occupied, permitting would’ve been a breeze.
- 4yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Yeah @Adam Johnson. If the owner won't budge on the wiring or the possible foundation issues, then maybe a pass is indicated. The only reason to move forward if it is already well under market on price. If it is market value and he won't negotiate on the issues then I would move on.
To rewire a place would probably be in the 15k range but that is hard to say as regional costs vary a lot.
Also, you should be able to take advantage of the FHA 3% down financing if you owner occupy. Check with your lender.
- NASHVILLE, TN · Member since 2020 · 3 posts · 1 vote4y
Quote from @Michael Baum:
Yeah @Adam Johnson. If the owner won't budge on the wiring or the possible foundation issues, then maybe a pass is indicated. The only reason to move forward if it is already well under market on price. If it is market value and he won't negotiate on the issues then I would move on.
To rewire a place would probably be in the 15k range but that is hard to say as regional costs vary a lot.
Also, you should be able to take advantage of the FHA 3% down financing if you owner occupy. Check with your lender.
That’s my thoughts on it. It was a nice set up for what I was going to use it for but for the amount of money that would’ve gone into it with no leniency from the owner. I’ve passed on the deal and looking for the next now.
I've considered FHA but I may just go with 5% down conventional depending on the deal since I know FHA can be a bit more harsh with guidelines
- Real Estate Broker · Medford, NJ · Member since 2018 · 236 posts · 177 votes4y
@Adam Johnson I bought an 1800s duplex with FHA. In my loan packet it says you cannot do short term rentals under 30 days with it. You have to read the mortgage packet to verify. As for the issues, with older homes expect to dump money into it, there's always something but if you get a good inspection you should have a good idea of what you're getting into. I'm very happy with my purchase, wish you lots of luck.
- Member since 2018 · 58 posts · 24 votes4y
I'm not certain I'm reading your description of the property correctly, because "older wiring" and "a lot of things on the inspection" sounded like something serious to me.
To guests old, broken and dity are all synonyms. If you are thinking of making an older home a STR it will need a complete cosmetic rehab.
Also, you will have a wide variety of people staying, and inevitably, some will be Darwin Award contenders. Meaning the property must be as safe as possible.
Hope this helps.
- 4yDavid GoodmanBusiness MemberRealtor · Nashville, TN · Member since 2020 · 172 posts · 92 votes
Yes you can STR with old wiring. We wouldn't have any short term rentals in East Nashville if that was an issue.
I love 1940's houses, but yes you have to take into consideration that electric could be an issue that you need to update at some point. As far as plumbing goes, my opinion is to deal with problems if they come. Every duplex you're going to look at in this price range is going to be from the 1960's or later. Non of them are going to have updated plumbing or electrical.
The Grow Team4.824 Reviews - Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes4y
If you have a good & experienced inspector he should be able to tell you what's a big deal and what isn't. "Hey, I really think you need to get this checked out by an engineer". Or "there are a couple minor cracks, but not too different from most other houses this age that I inspect". Sometimes you need to pry a bit. Inspectors have a tendency to not give their opinion because they're fearful they'll get sued if something turns out the other way.
I once had a structural concern and hired an engineer. In my case it was a waste of $1,000. The guy came out for a few minutes, did a couple of calcs, and told me everything was fine. Yeah, I guess it was good to get the thumbs up, but if I knew to pry and press for some answers I probably could have gotten the same thing out of the inspector.
To Luke's point, aluminum wiring isn't ideal but millions of homes in the US have aluminum wiring and don't have any issues. Pipes could def. be a problem, but the house is 80 years old - there's a chance that the pipes needed repair a decade ago.
And price is a huge consideration. If you we're paying top dollar, then yeah, everything's got to be right. But if you're getting a sweet deal that you can improve with some sweat equity, it could make sense. If most of the work is cosmetic you can have the boys come over on Saturday and kick back a few natty light's while getting some work done.
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