Keep old wiring or rewire BRRRR property

Pittsburgh, Pennsylvania
Rehabbing & House Flipping
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Keep old wiring or rewire BRRRR property

Fillip Nelson
Member since 2021 · 10 posts · 1 vote

Hello,

I purchased a 3/1 rehab property in Pittsburgh. It was vacant for some years. It needs a new panel and main service line according to inspector. The current system has fuses and I have only have 4 circuits for the entire home. I have quotes to replace the panel and main service line for $1,800-$2,100. My question is should I re-wire the home and add more circuits? That would be from $6,500-$8,000.

I plan on either having window AC units, or perhaps mini-split systems, I have not decided.

I have a tight budget, but is the rewiring something that needs to be done since I am renting it out, or do I have other options. Some of the old wiring is knob and tube.

Thanks,

Fillip

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Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
1y

@Fillip Nelson When I read investors write they have tight budgets and are completing a BRRRR I automatically assume they have to keep their construction costs below a certain amount because they are keenly aware of the max valuation and know they won't get their cash out on the refinance unless they keep their costs down. It's one of the biggest mistakes an investor can make and why so many pursuing BRRRR's fail in this business. Don't sacrifice doing things correctly for the sake of a cash out on a refinance that will only lead to more costly issues to resolve in the future. Wire the property correctly and address other defects now even if it means you are leaving money in the deal. Otherwise, you are likely doing nothing but acquiring paper equity you will never realize.

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  • Anthony Angotti
    Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes
    1y
    Quote from @Fillip Nelson:

    Hello,

    I purchased a 3/1 rehab property in Pittsburgh. It was vacant for some years. It needs a new panel and main service line according to inspector. The current system has fuses and I have only have 4 circuits for the entire home. I have quotes to replace the panel and main service line for $1,800-$2,100. My question is should I re-wire the home and add more circuits? That would be from $6,500-$8,000.

    I plan on either having window AC units, or perhaps mini-split systems, I have not decided.

    I have a tight budget, but is the rewiring something that needs to be done since I am renting it out, or do I have other options. Some of the old wiring is knob and tube.

    Thanks,

    Fillip


     If you plan on window AC units then yes absolutely. You might also need more circuits if you have mini split as well. 

    I think since you don’t have many outlets and circuits for the house you almost have to do this one. Where is the house at and do most of your competing rentals have air conditioning? 

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  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    1y

    If the old wiring is knob and tube I would suggest you do get it rewired.. Especially is this is going to be in your portfolio for a long time. I would also get 5-7 quotes on this rewiring from licensed contractors/electricians before committing.. You might be saving $500-$1000 by doing a lot of bids and finding someone to do it for less.

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  • JooYung Choi
    Realtor · NJ · Member since 2023 · 215 posts · 99 votes
    1y

    Highly recommend doing a full rewire. You are risking your property, especially with knob and tube. Since you are going to be keeping the property, wouldn't you want to own a property with updated mechanicals? Less headaches for you down the road.

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    1y

    Yes, complete re-wire. K&T is dangerous and not worth the risk. You will raise the value of the property too....

    1Reply
  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    1y

    @Fillip Nelson When I read investors write they have tight budgets and are completing a BRRRR I automatically assume they have to keep their construction costs below a certain amount because they are keenly aware of the max valuation and know they won't get their cash out on the refinance unless they keep their costs down. It's one of the biggest mistakes an investor can make and why so many pursuing BRRRR's fail in this business. Don't sacrifice doing things correctly for the sake of a cash out on a refinance that will only lead to more costly issues to resolve in the future. Wire the property correctly and address other defects now even if it means you are leaving money in the deal. Otherwise, you are likely doing nothing but acquiring paper equity you will never realize.

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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    1y

    Generally I would want to avoid a rewire if at all possible. But with knob and tube, I would suck and up and do it. Too much of a fire hazard.

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  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    1y

    @Fillip Nelson My insurance company will no longer insure property that has fuses.

    Would recommend the full rewire.

    1Reply
  • Jeremy Horton
    Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes
    1y

    The wiring sounds original and extremely old - not only that, if you replace the panel you will likely need an inspection by the city. When the city inspects the wiring, they'll fail you for the knob and tube. Insurance will likely be hard if not impossible to get with knob and tube as well. 

    That being said, the logical route is to re-wire.

    Good thing is that when you go to sell, you will likely have a leg up on the competition since your house will be re-wired. 

    Note - when you re-wire I would add extra lines for anything big or anything that gets hot - mini-split, window unit etc. 12 ga wire 20 amp breakers and you'll never have to mess with it again. Also gfci outlets within 6' of a water source - ie sinks/baths

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  • Matt DingusBusiness Member
    Real Estate Agent · Pittsburgh, PA · Member since 2020 · 83 posts · 76 votes
    1y

    Hey @Fillip Nelson you're obviously getting a consistent answer to do the re-wire which I'd agree with. Another thing I'd note in general with BRRRRs, assuming you're using lending/hard money, I would always get the big ticket functional/mechanical costs done during the renovations. You have this time to leverage the money you're borrowing to get a lot of this done and not have to worry about it down the road as you own the property. If you skip the rewire, the roof, furnace, etc. now then after you refi and have to get it done at some point - then that 8k or cost will be coming out of your pocket. Just something to consider. Less worry and less money out of your own pocket.

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  • Jamie DietzBusiness Member
    Lender · Pittsburgh, PA · Member since 2015 · 175 posts · 90 votes
    1y

    I agree with the consensus above and recommend rewiring it now. It’s so much easier to get it done before any updates are made. Most likely, they’ll need to cut into drywall and make a mess to access certain areas—better to handle that before finishing work begins.

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  • Jiji Kim
    Member since 2024 · 7 posts · 12 votes
    1y
    Quote from @Fillip Nelson:

    The current system has fuses and I have only have 4 circuits for the entire home. I have quotes to replace the panel and main service line for $1,800-$2,100. My question is should I re-wire the home and add more circuits? That would be from $6,500-$8,000.


    Hi Fillip, 
    I concur with everyone else regarding rewiring the entire house. I'm in a similar situation with a duplex and the first quote I got to rewire the entire building, replace main service panel, unit subpanels, main service line put me on my rear at almost 4X the high end of your quote. Would love to compare notes and share learnings and electricians / trades persons (to reach out to and to avoid). 

    Thanks is advance, 
    Jiji

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