Hindsight Insight

Just closed on a small multifamily property in the Midwest, and I'm still reeling from an unexpected expense that blew our initial budget. The cap rate we paid was 7.5%, with in-place rents at $900 and pro-forma potential of $1,200. Our value-add plan included renovations to the units and common areas. However, during the inspection, we discovered asbestos in the flooring, which added a whopping $50,000 to our costs. The surprise expense took a bite out of our profit margins, but we're pushing forward with the renovations, focusing on maximiing ROI. The key takeaway is to always pad your budget for the unexpected. Anyone else encountered surprises like this in thheir deals?