On July 11, 2004, about 0700 eastern daylight time, a Mooney M20J, N302SB, was substantially damaged when it struck a residence and trees during a forced landing after takeoff from Hackettstown Airport (N05), Hackettstown, New Jersey. The certificated private pilot sustained minor injures. Visual meteorological conditions prevailed and no flight plan had been filed for the flight destined for Lawrence Municipal Airport, Lawrence, Massachusetts. The personal flight was conducted under 14 CFR Part 91. According to the pilot, he performed a "complete pre-flight inspection and run-up" prior to departing from runway 23, a 2,200-foot-long, asphalt, runway. The airplane was about 100 feet above the ground, when it experienced a total loss of engine power. The airplane struck the rooftop of a residence, and came to rest in trees, about 200 feet from the departure end of the runway. Examination of the airplane and engine by an FAA inspector did not reveal any pre-impact mechanical malfunctions. Compression was attained on all cylinders. Valve train continuity was observed, and crankshaft rotation was verified. When rotated by hand, the single drive dual magneto produced spark at all lead ends. The top spark plugs were removed for inspection. Their electrodes were intact, and were light gray in color. The engine driven fuel pump was removed and observed to operate. During the actuation of the fuel pump by hand, water was expelled from the fuel outlet port. When the fuel flow divider diaphragm and cover were removed, water was observed. Approximately, 6 ounces of water was recovered from the gascolator. The airplane was last refueled and flown the day before the accident. The airplane was equipped with sump drains at the lowest point in each fuel tank. A drain valve was also installed in the fuel selector valve assembly for draining the lowest point in the fuel lines. Additionally, the airplane information manual, normal procedures, pre-flight inspection section contained procedures to check for, and remove "sediment contamination and condensed water accumulation."