Top 5 Electrical Issues Investors Should Know
What do investors need to know about electrical issues on their properties? To find out, I sat down with experienced electrical Lance Padilla to discuss the top 5 most common issues and how to resolve them. Listen to the video to learn about outlets, wiring, and what types of electrical panels you should replace immediately.

At some point, all landlords will face electrical issues in their properties.  What are the most common issues, and how are they resolved?  To find out, I sat down with electrician Lance Padilla. 

Lance has been doing electrical work around the Denver area for the past 17 years.  He’s worked in everything from single family homes to multi unit apartment buildings.  He and I discussed the top 5 most common electrical issues he encounters.

Three Learning Options!
  1. Listen to the podcast “#338: Top 5 Electrical Issues Investors Should Know” on the Denver Real Estate Investing Podcast
  2. Watch the YouTube video (at the bottom).
  3. Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.

1. What should I know about GFI outlets?

Ground Fault Circuit Interrupter, or GFI, outlets are extremely important and required in all areas where water is likely to be present.  Once they sense water, they trip to prevent electrocution.  In order for a property to be up to code, every wet location, such as kitchens, bathrooms, garages, and outdoor areas must have a GFI.    

For investors who are buying an older home that doesn’t have GFIs, they are easy to find at any hardware store.  The parts are about $18 for the outlet and $55 if a breaker is needed protect the circuit.  In general, the total cost with labor is around a few hundred dollars, but it doesn’t require an entire electrical overhaul. 

The lifespan of GFIs is generally 7-12 years.  The components themselves are sensitive to fluctuations, such as rolling blackouts, or power outages.  Power surges like lightning strikes can damage the outlets just as they would a computer. 

Additionally, GFIs are capable of being overloaded just like other circuits.  If a GFI shows signs of burning, it needs to replaced. 

Burnt GFI Outlet
GFI outlets can be overloaded and burn

To check if the GFI is working properly, simply hit the test button on the outlet.  If the button indicates the outlet is working, nothing more needs to be done. 

2. How do I plan for tenants installing AC units and space heaters?

While landlords can tell tenants not to install these energy-consuming appliances, Lance reminds the audience that there’s no guarantee it won’t happen.  He recommends that landlords assume that tenants will want to install one or both of these and plan accordingly. 

AC units and space heaters draw a huge amount of power and can trip breakers.  The standard living room or bedroom circuit is 15 amps, which is about what a window AC unit draws.  To prevent the circuit from overloading, landlords should simply install a 20 amp circuit in areas that it’s likely a tenant would use one of these appliances. 

The general cost for these circuits is between $300-1500, depending on the amount of material needed.  If the panel is close to the circuit, the cost will be lower.  However, if the panel is on the other side of the unit, it will require lots of conduit and wire. 

3. Why is aluminum wiring bad?

While copper is the traditional metal used in electrical wiring, aluminum wiring was popular in the 1960s through early 1970s due to a copper shortage.  Aluminum was determined to be the next most conductive wiring after copper, at about 60% conductive compared to copper’s 98%. 

When an electrical load is put on the aluminum wire, it heats and expands.  Once the load is off, it contracts.  Outlets have screws in them around which the wire is wrapped, and the expansion and contraction can cause the screw to come loose.  This results in a loose wire that will arc and can start a fire. 

While aluminum wire is still in use today, one wire contains 12 different strands, which won’t heat up as much.  Older aluminum wires only have one strand, which is what causes them to generate a high amount of heat. 

Loose Aluminum Wiring
Aluminum wiring heats up and gets loose

Lance says there are several steps that can minimize the risk of a fire with old aluminum wiring.  The best option is to rewire the whole house, which is costly but will permanently resolve the issue.  Rewiring a house typically costs anywhere from $35K-55K.  

Although the other options are significantly cheaper, they are only temporary fixes that require checks every 5 to 15 years.  The cheapest option is to purchase an aluminum outlet.  Another option is to use a purple wirenut that has a glue that bonds copper and aluminum together.  The quality of the installation will greatly affect the outcome.  The cost of parts and labor for these options are usually a few thousand dollars. 

What types of electrical panels should I replace?

Lance gave me a list of the types of panels he recommends investors replace:

  • Federal Pacific Stab-Lok: These panels lost their UL listing in 1983 because the breakers don’t trip.  If a breaker doesn’t trip, heat will build up and cause a fire.  This is a well-documented issue that we’ve discussed on the show in the past. 
  • Zinsco: The design of the breaker is the biggest issue with these panels.  It has a horseshoe design that clips into the bussing.  If the breaker is loose, it will start to arc and weld itself to the bus bar.  Pulling on the breaker causes the entire bar to come out, and if it’s energized or grounded, can cause a fire or explosion. 
  • Pushmatic: The biggest issue with these panels is that new parts for it are no longer made.  The company went out of business, so only refurbished parts are on the market, which can be quite costly. 

The average cost for replacement is anywhere from $2000-3500.  If the property is an apartment building, the owner may need to upgrade the grounding system and install a bypass meter. 

5. What options are there for overhead lighting?

A lot of apartment buildings or older homes have 8’ ceilings and hanging lights or chandeliers.  Lighting options are of a particular interest to Lance because at 6’2”, he often finds himself walking into hanging lights. 

His favorite style of overhead lighting is what he calls “flippies”, also known as disc lights.  These lights mimic the look of can lights, but they hang flat and attach directly to the drywall without having to cut into it.

Disc lights are drastically cheaper than can lights: the entire fixture costs less than the light bulbs that go into the can lights.  Aesthetically, they also make the ceilings feel higher than they are to create a spacious feel. 

Depending on the size of the room, electricians can install fewer disc lights than traditional can lights to generate the same amount of lighting.  The lights can go anywhere on the ceiling, since they don’t require cutting into the drywall.

Connect with Lance

If you have questions for Lance, you can reach him directly via phone or email:

He’s looking to add more people to the team, particularly service electricians.  Applicants don’t need to have prior experience–he’s willing to teach anyone interested and pay for apprentices to go to school.  Reach out to Lance to find out more details. 

Connect with Us

If you’re interested in finding your own investment property, reach out to us and we’ll be happy to help you figure out the right strategy and property for you. 

YouTube Video

Top 5 Electrical Issues Investors Should Know

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Authors
Chris Lopez
Chris Lopez is a Denver area real estate entrepreneur and investor, as well as the host of Bigger Pockets’ House Hackerz and the Denver Real Estate Investing Podcast.
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