How and when to get utilities turned back on (NJ REO flip)

Question

Hi,

I have several properties I'm considering making offers on for my first flip. I've been very thorough with my numbers, gotten estimates from qualified contractors, and I'm confident that I'll be able to make a reasonable profit IF any of my offers are accepted. I'm in NJ, and mostly I'm dealing with REO's which have been vacant with utilities turned off for various lengths of time. My biggest question at this point has to do with how and when to get gas, water, and electricity turned on. I assume everything needs to be turned on prior to inspection, but how do i know that the house isn't going to explode when the gas comes on, or become flooded when the water comes on, or burn to the ground once the electricity comes on?

Do the various utilities send people out when they turn things on to make sure nothing goes wrong? Does the property inspector arrange for this with the utility companies? I'm at a loss as to how to proceed in this regard, and any help from experienced flippers in NJ would be greatly appreciated.

Thanks!

Steve Wilcox · Answer

In NJ the way it works in the counties we do business in (union, essex, monmouth, middlesex, bergen, sommerset, morris) is that if the utilities have been turned off for more then 6 months you are required to get a cut in card for your electric to be turned on and a pressure test on all your gas lines to have your gas turned on. Water is easier as it poses no real danger to the surrounding properties if you have a leak and flood your house.

The cut in card and pressure test both get done by the city building inspector and require a license plumber and license electrician to pull a permit for them. Most of the time we end up replacing all the gas lines in the house, and on properties vacant for a while with no utilities. The process is a real pain and time consuming, but it is the process.

If you are doing a significant rehab odds are you are replacing most of the utilities in the house anyway (especially if its an older home which most in NJ are), but you need to get the ball rolling asap on the process as it takes time. Often we work on a generator power with propane heaters until we pass rough inspections and get the pressure test, and the cut in card for electric completed and can have the utility company come out. Some utility companies have there own inspectors who come out after the city has inspected (and typically request some changes), and have their own rules and codes in addition the local building codes.

Dave Versch · Answer

Thanks @Steve Wilcox. That was extremely helpful!

Stanley Parsley · Answer

JD

I know what your going through

I had to learn from hard knocks

it is my suggestion once you get the deal closed and you have the keys go through the building and make sure everything is off, breakers, water, gas

get you a compressor and a pressure gauge to check the water and gas service- turn the meters off then you can check the service connections to the meters and not just the building

get you a meter and turn the breakers on one at a time and check for ground faults and line voltage and label the panel accordingly to the breaker, this way you know what circuits are running which areas esp if someone has done work on the property

as far as the split units or gas packs the only way to know if these units are operating correctly is to turn them on and check your pressures you will need a ac guy if you don't have the equipment to do this work

enjoy

JD Martin · Answer

I can't speak for NJ, but in all of the deals I've bought or was in negotiations on, the bank/foreclosure company/investment company wouldn't agree to turning on the utilities (except for one deal, which allowed the local water turned on but no other utilities). Sometime these places are winterized, so they don't want anything being used, sometimes they just don't want the responsibility of making sure everything was secured, so they won't allow anything to get turned on. Some of these properties had inspection sheets with utility conditions listed (ie plumbing held pressure, all outlets worked, heating system operational), some of them had nothing. So I approach these deals as if the utilities will need some work and structure my offer accordingly.

How and when to get utilities turned back on (NJ REO flip)

How and when to get utilities turned back on (NJ REO flip)

Most Popular Reply

4 Replies