That wouldn't account for various capital expenditures that would be needed in the future.

A note about our process - we run our numbers pretty conservatively for the ARV and rent, assuming worse case scenario:Purchase: $60,000 (listed for $75,000)Rehab: $65,000ARV: $130,000Rent: $1,400Hard Money Loan: 12%, 3x points, 1 year term - interest only paymentsReturn on Investment: 7.1%Cashflow: $342 (amount remaining after mortgage payment, 10% vacancy, 5% Repairs/Maintenance, 5% Capital Expenditure, 10% Property Management are paid)Purchased: March 2021When you refinance, most banks will authorize a loan for 75% of the Loan to Value (LTV), so we were expecting a $97,500'ish loan (75% of $130,000).

I guess the thought is that with inspection contingency, if it is not structurally sound, then you have an out.My concern, it is a 3 unit, so what if the tenants need new appliances or something that is not covered by the contingency and I have only budgeted for 5% for maintenance and 5% for capital expenditures, will I be getting myself into a financial pit?

They focus only on cash flow, taking into account typical monthly costs such as mortgage, utilities, reserves, capital expenditures, cleaning fees, etc.

I don't know what the insurance commission allows or sets, but total expenditures for coastal insurance are massive and I'd expect the trend to continue indefinitely. 

Is there any capital expenditure items (HVAC, Roof) that will need repair / replacement in the next 3-5 years?

Take into account vacancy, capital expenditures, maintenance, and property management.

I got the already great price lowered a little more as it needed a new Central Heat and Air unit right after purchase which was a pretty big expenditure.

If so (and that's a gamble, of course), how many years would it take for you to recover the lost equity and additional expenditure? 

If everything goes wrong, such as your capital expenditures are too high to make sense to fix up the property, then you could just make money from selling the land with existing cash flow.