Knob & Tube Wiring - How much value can be found?

Question

Hello just wondering how much value is to be found in updating know and tube wiring prior to refinance? Is there a rough estimate? Seems like a must upgrade. Thought everyone?

Account Closed · Answer

I'm guessing it's 60 amp service or maybe 100 amp. The typical modern property is 200 amp and updated "grounded" wiring. A lot depends on your expected tenants and the sq footage of the house. If it's a 3 bed 2 bath (say 1,000 sq ft) or bigger and you intend to hold long term and your tenant base is middle class or white collar then I'd upgrade. If it's a 2 bed 1 bath I'd probably wait until I could level the house and build a new one. The economy is Canada is headed for a rough ride in the next year or two. Canada has the highest debt per capita. It's higher than the U.S. That means a correction at some point. If I was investing in ON (Even Toronto) I'd make sure my mortgage payment was workable for rents today and for the future assuming rents dropped for some reason. People are selling their places in Manhattan NY for 56 cents on the dollar from a year ago. Things change. I know, I know, "it can't happen here, this is Canada after all". ;-)

Jake Arnold · Answer

@Greg Gangle I own a duplex. On side has completely new wiring, the other side it half new half knob and tube. My insurance premium is about $400 higher because of the knob and tube. In my opinion knob and tube is fine as long as you can run everything you need to off it in regards to amperage. The side with knob and tube easily runs 3 window ac units and two refrigerators. If there’s a fuse box and not a breaker box I’d start there. For me though I plan to upgrade down the road when walls need to be repainted ect.?

Marc Winter · Answer

We manage lots of older units in this area of NE PA, many with knob and tube wiring.  Quick answer to your question--bite the bullet now and get it upgraded.

Add outlets up to current code standards. Properly ground and bond the lines where needed. Make sure it's done by a licensed electrician who pulled a permit and had it inspected when work is complete. This is a health/safety issue--do not skimp here.

Think about this:  people are working from home.  That means a LOT more electrical load.  Plus, while many people love older homes (our office is in a grand old Victorian built in 1896) I know of no one that would want to live in an older home without some modern upgrades to electric, plumbing, kitchen, and baths.

Hai Loc · Answer

You can still inform the insurance company and they will give you a 90 day grace period to upgrade and still pay a standard premium. Replacing the knob and tube is a value add play as you are technically adding value by reducing the expenses "added insurance premium". Also piece of mind when your ready to offload it.

Greg Gangle · Answer

Hello @Melanie Dupuis and Account Closed thanks so much for your input. I thought about sitting tight and preparing for a 'correction' however even if I have to drop rents I'm still cashflowing and have lots of equity in them. Melanie...I'm 50/50 about even going through with this deal because I've heard as well that knob and tube doesn't increase the value of the home for a refinance. Therefore it might not be a good investment. The purchase price is $44K requires about $20-25K (including K & T). It needs new windows, paint, flooring in one room. My realtor says the home should be worth around $80-100K.

Greg Gangle · Answer

Thanks Account Closed I have an accepted offer on a house but the knob and tube is live throughout the house. I can A) leave the knob and tube and pay higher insurance or b) replace the knob and tube ($13K reno) along with a few other things (windows/paint/etc) and hopefully get it reappraised at a higher amount then refi. I'm just not sure what way to go. I could leave it for now and upgrade later or do it now and be done with it. I'm not a flipper but a buy and hold kind of person.

Account Closed · Answer

Not exactly sure what code is in ON but out west in the U.S., if the wire is still in good shape there is no real requirement to upgrade. However, since so much has changed since the knob and tube days, added devices, more usage of electricity, considerably different codes, I tend to upgrade the wiring. Keep in mind that I gut houses and remodel so it's a lot less of a problem than if the walls are lath & plaster and you're trying not to damage the walls. It's a case by case basis and is determined by what you want to do with the property.

Suzette T. · Answer

Good luck! We have run into that and our electrician always recommends the upgrade!

Greg Gangle · Answer

Thanks @Hai Loc and @Marc Winter. If I do purchase, I will 100% upgrade right away. I just don't like the idea of using 100% of my own money for the upgrade. Mind you the home is underpriced….most homes in that area are at least $80K. I'm hoping I can do this upgrade and a few other minor things (windows/paint) then possibly get it refinanced for the $80-90K and claw some money back.

Melanie Dupuis · Answer

@Greg Gangle In our experience, it does not necessarily increase the value at refinancing. I have asked different appraisers when doing walkthroughs what they thought about things like updating the wiring, the plumbing, fire retrofit, etc...

They advised me that for things such as that, they already assume this is done or should be done. It is not like renovating a kitchen or bathroom that adds value through cosmetics.

Knob & Tube Wiring - How much value can be found?

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