Inspection without electricity/water running. What can I do?

18 Replies

Hey everyone. My name is Roberto Torres and I'm a newbie investor from Puerto Rico that just got first offer accepted. I don't know if I was more excited or scared when I heard my offer got accepted though. Now what? I thought. First get the lenders, do inspection, talk with family members for cash loan for down payment, find contractors, get job done, then I'm supposed to be a landlord. I'm screwed, what have I gotten myself into!?

Initially I made a 40k offer when seller was asking 70k. After seller declined and said she would go down only 10k she agreed to go to 55k. I could make $200 in cashflow after expenses at this price and this was good. When I was about to leave, a neighbor told me to check plumbing before closing because she was told by the deceased person who lived there that it clogged and he defecated and through it out on a plastic bag on the trash. Horror! This was so crazy to hear at the moment, it felt surreal.

I panicked a little after getting home and was revising what where the next steps. I was not going sign anything until I did a formal inspection but... what can I do if there hasn't been running water on the property for at least 2 years? Can an inspector really know if the plumbing is ok without running water? I imagine I can't put water or electricity on my name before being owner of property. Is crossing my fingers and praying to baby jesus the only thing I can do? I can get in a bit of trouble if something big like plumbing has to be redone after closing. Any recommendations are so welcomed!

Day 5 - #100DaysOfRealEstate

@Roberto Torres

If nothing has worked in 2 years, expect a large replacement bill on everything. If you're lucky, the water was properly shut off because the owner couldn't afford the bill. If you're not lucky, the owner cut off the water because there was some major damage to waste pipes and water supply somewhere.

In these types of situations, the seller is probably not going to let you turn the water on to test it.

If you already planned to gut the place, it's less of an issue. The biggest problem is to make sure that the sewer works.

Roberto
Is this an off market deal? It sounds like it is, a (good) Real Estate agent would be guiding you through the process.
If the water hasn’t been turned on for 2 years (if I understood correctly) and past tenant had no running water yes I would assume property has Plumbing issues the question is how bad is it?
What is your goal, to buy and hold, flip, wholesaling?

I would think that you can use air pressure on the water supply piping.  Talk to a local plumber, and I bet he has done this many times.  They can install a gage and check back later to see if the air pressure has dropped.  And, look into hooking up a generator to the house.  You probably won't be able to run the A/C, but you can check everything else.

@Christopher Phillips Hey thanks for the quick response! I was not planning on gutting it. Kitchen needed to be redone and bathroom just updated. Rest does not look like it needs too much. I will find out prices of completely making again and make sure I budget for it. Thought of bringing in a plumber additional of inspector because maybe they could see better through the pipes or something. Will keep posted! 

Originally posted by @Roberto Torres :

Hey everyone. My name is Roberto Torres and I'm a newbie investor from Puerto Rico that just got first offer accepted. I don't know if I was more excited or scared when I heard my offer got accepted though. Now what? I thought. First get the lenders, do inspection, talk with family members for cash loan for down payment, find contractors, get job done, then I'm supposed to be a landlord. I'm screwed, what have I gotten myself into!?

Initially I made a 40k offer when seller was asking 70k. After seller declined and said she would go down only 10k she agreed to go to 55k. I could make $200 in cashflow after expenses at this price and this was good. When I was about to leave, a neighbor told me to check plumbing before closing because she was told by the deceased person who lived there that it clogged and he defecated and through it out on a plastic bag on the trash. Horror! This was so crazy to hear at the moment, it felt surreal.

I panicked a little after getting home and was revising what where the next steps. I was not going sign anything until I did a formal inspection but... what can I do if there hasn't been running water on the property for at least 2 years? Can an inspector really know if the plumbing is ok without running water? I imagine I can't put water or electricity on my name before being owner of property. Is crossing my fingers and praying to baby jesus the only thing I can do? I can get in a bit of trouble if something big like plumbing has to be redone after closing. Any recommendations are so welcomed!

Day 5 - #100DaysOfRealEstate

 Roberto, you will need to take that potential $200 in cash flow you expect and add a few hundred a month to make this work on the front end - if this is the category of property and tenant currently occupying you will have a tough time in my opinion remotely handling this type of asset category @JayHinrichs he will certainly let you know how he feels about this scenario, I am certain he will advise you that this better be literally in your backyard and you still going to have a tough time.  Complete your due diligence, be thorough with your inspections. 

@Raul R. It is an off market deal. Some lawyer sisters are selling it for some old sisters that got it by inheritance. I found it on the equivalent of craigslist on Puerto Rico. Should I get a real estate agent right now? I'm trying to stay on top of everything, reading and talking to everyone that let's me speak about real estate.

Past tenant was the person who passed away. Neighbor told me that the  older gentleman defecated in a plastic bag and threw away sometimes because it clogged. She sounded a little bit strange but let's believe her and think the worst can happen. Nobody has lived in apartment since. 

My plan is to buy and hold and use as rental. It's in a touristy area close to beach and I have experience in Airbnb and know I have options for this. Even moving in if worst happened because I currently rent. 

@James Barnhart Those are great and practical ideas, I will look into plumbers tomorrow and ask about these options. Thank you so much! 

@Steven Gesis Hey there! Thank you for the recommendation! The past owner was the one living there. He was an old spaniard that lived mostly alone, people from the street tell me. This is not the regular tenants in the area. A lot of young people are coming to the area because it's experiencing a revival and a lot of restaurants/bars/shops are opening. The property is not the best looking in the street but the apartments on top levels (3 apts) are in good shape. Properties next to it are pretty more expensive. Gentrification is happening in this area so was planning on holding. Appreciate the tips

@Roberto Torres

If you're under contract not sure if you can bring in a buyers agent at this time

In the future I highly recommend working with a buyers Agent, especially in this stage of your investing Career. Their job is to guide you through the Process and the seller pays the commission.

I'm certain the Property has Plumbing issues and Probably Electrical Issues as well if it has been shut off for that long. If the seller doesn't turn on the water or Electricity it will be difficult for an Inspector to do a proper Inspection. IF you were not planning to gut property, and your goal was to do "minor" work I would walk away if Proper Inspection can't be done of Property. Too many unknowns, if you dont have the budget it will go downhill fast.

If you decide to go forward, do not I repeat do not go with an Inspector that Seller recommends. You ask in this forum or look for best Inspector in PR. You mentioned you are experience w Airbnb but Make sure you understand the  AirBNb laws in PR before committing to purchase.

Te Deseo Suerte!!!!

@Raul R. Gracias Raúl! I’m suppose to go under contract today. Will decide to get REA today. Makes sense to back out if can’t get water or electricity going because my plan was not to gut the place. Will definitely not use seller’s inspector! If anyone recomends inspector in PR please let me know! If inspector tells me same thing about electricity and water I will ask for lowering buying price from 55k to 45k so I have more budget for repairs! Yesterday I felt pretty lost but with all these tips and recomendations I’m much more calm now so really appreciate all the help :) 

Morning. Whether or not a seller “will allow you” to turn on the water for Inspection is moot, IF you have the proper professionals (agent, attorney) drafting your documents. If during the negotiation process you/your professionals learn that the seller “won’t allow you to inspect” then that’s a better time to get the red flag, than when you hear from a neighbor that someone’s using a plastic bag for a rest room.

Even if it’s too late for an Agent, as another poster has stated, you can hire an attorney now on a emergency basis and I’d recommend doing so.

Sounds like your price point is good, but it’s not always about price point. Lots can— and does— go wrong. Protect yourself whenever possible, and it’s exactly those protections that allow you to go back to the well when something like this pops up.

Good luck. Please keep us posted.

@Steve McGovern after posting this I have decided to indeed get REA and attorney. Haven’t signed anything yet just vocal agreement. Contract will be sent to me today. The sellers are telling me property has been closed for two years and I can arrange to inspect it whenever I want so I don’t think they are trying to hide anything intentionally. Problem is the property last owner was very lonely and did not even have friends that knew his family. After he died, nobody could open apartment because no one really knew the poor guy and family was in Spain and very hard to reach.

When you say that weather seller would allow me to turn on water during inspection is moot, you mean that I can try to covince them to try this option? How can they turn water or electricity if owners now are in Spain? Maybe they authorize lawyers handling case to put water or electricity on they’re name for maybe 10 days just to test it or something and I pay for it? 

Will definitely keep everyone posted, this has been so helpful!!!

@Roberto Torres I mean that when you purchase a property – specifically a residential one – there are two contingencies that any attorney is going to add to your contract: an inspection contingency, and a mortgage contingency.
Assuming that you are getting money to purchase this property from a lender, you want to add a clause that says that if you can’t get that financing for any reason, then you will be released from the terms of the contract. You may need to forfeit the deposit, but you will be otherwise relieved from having to purchase the property.
The inspection contingency says that you have the right to conduct an inspection of the property. The key here, wherever possible, is to anticipate the actual inspections that you need. Sometimes it’s simply a home inspection. Other times, you will need a structural inspection, an inspection of zoning records, and inspection of a septic system, or in your case inspection of the plumbing system. If you contract this into the document, then you have the right to do it.Furthermore, if this cause is drafted properly, then it will also give you the right to walk away if you are not satisfied with the conditions of the home or its components

It is at this moment but when they say “no you can’t inspect the plumbing“ that you know something is wrong before you have signed The document.

Furthermore, these two contingencies also work together – what lender is going to want to lend to you with a known faulty plumbing system, unless you’re getting a construction loan right out of the gate? You can’t get the loan that you intended to Obtain, then you are again released from the terms and conditions of this document.

This whole process allows you to negotiate intelligently and to renegotiate your position in the middle of the deal as soon as you know that something has gone wrong with the property. Without the guidance of a proper attorney, there’s no way you will be able to protect yourself from these things that you cannot see.

There are a large number of caveats: for example, this Method does not work for full rehabs, it does not work when somebody is self – financing,It doesn’t work in situations where the seller is saying “you buy the property as is and that’s all there is to it”, but for 99% of new tires on residential properties, this is the way to go

Of course, you’re not forced to act upon the information you receive, you can always waive your Knowledge or ignore it if and when the inspection shows major termite damage but you are a carpenter or when the inspection shows a septic system issue, but you were going to hook it up to city sewer anyway. So you can do whatever you want with the information, but at least you have a path to acquiring that information and a possible way out if it’s way over your head.

@Steve McGovern You're a lifesaver. Will definitely be sure this contingencies are included so I'm protected! Will keep you posted. Thank you so much for taking your time and sharing this valuable information. 

Congrats on the purchase!  

An air pressure test will help detect issues with the domestic water; however, the water lines will need to be disinfected/chlorinated. Legionella loves stagnation!   You can't really tell about the plumbing behind the walls, if you smell sewer gas ( hydrogen sulfide), it may mean a broken pipe or empty p-trap at sink or tub.  The toilet could've been plugged and this person couldn't get help. It's a sad story. 

Best of luck, 

The electricity is no problem. Any electrician should be able to able to connect a generator to your panel and check the electricity. I'm not sure about plumbing, but I don't see why a plumber couldn't connect the water line back. You should always factor in some expense for repair, no house is going to last forever. If you don't want the deal you're inspector can find many things wrong with the house and let you back out of the deal, like water in ceiling, roof, window etc. 

@Roberto Torres Congratulations,  you are now in a deal that is pushing you to learn fast,  everyone on this forum is giving you great advice, just keep in mind that you will be able to renegotiate the price when you get the inspection, testing done,   at this point you may not need an agent but for sure you need an attorney on your side 

@Roberto Torres

There is a 100% chance that this property will need plumbing repairs.  

Just make sure you're able to properly inspect it or account for worst case repair costs in your analysis.

@Frank Sanchez @Laith Ali Thanks for the great tips. I'll ask plumbers/electricitians about this if I can't get water/electricity running before closing. 

@Carlos Zapata Best way to learn! In process of getting attorney. Chance of renegotiation calms my stress! Thank you!

@Scott England Have my number for repairs so if it goes overboard I will back out. Thanks 4 help.

@Steve McGovern   Update: Seller told me to do basic inspection of electric and water so they certify that water and electricity is safe to install before signing option. Once this is done I will sign option with contingencies, putting 5% down, and will try to install water/electricity because I have writings so then proper inspectors can check it out when there is power and water. An inspector I called told me that it wasn't even worth it doing inspection without that. If they tell me I need 10k in repairs I'm probably backing out and since option has contingencies I hope getting my 5% back. This seems abstract and a longshot right now but it's the plan! Have you guys heard of doing this?

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here