House Hacking a Duplex in a HCOL Area?

[Victor Alias]

My wife and I are exploring the idea of buying a duplex (to live in and rent out) and are curious about others experiences with something similar. We have been struggling with what to do next on the housing front We've gotten close to buying a place a few times but backed off (including once where we had an accepted offer but got cold feet over a sizable appraisal gap).

We'd initially been exploring either a condo ($1-1.2M plus HOA fees) or a single family home in a less desirable suburb for ($1.2-1.5). We've recently started more centrally located duplex and triplex properties in the $1.8-2M range. They tend to be located in more central areas where we wouldn't have to sacrifice some of the things about the city we love and where the owners unit would check a lot of our boxes where rents could cover roughly 50% of costs. We're curious about anyone who has experience taking on something similar or more generally any thoughts on this as an approach.

We’re in our mid-thirties with one young kid. I finished grad school in 2015 (with $250k in debt!!) so we’ve only been high earners for about 5 years. I left biglaw earlier this year to take an in-house job with a (MUCH) better lifestyle but lower long-term earning potential.

Household Income: $365 guaranteed, $440 if I hit my bonus and include our rental (bonus is a target of $60k but is not guaranteed, rental grosses $15k though we net less after taxes/expenses)

Net worth: $1.15M: Cash-$390k, Equity in existing rental (out of state)- $200k, college savings $30k and retirement accounts - $520k, no debt (both cars owned outright and rental doesn't have a mortgage).

Current Housing – We live in a HCOL where we rent a 2bd/2ba condo for $3.1k. We’re happy with the place currently, but it won’t work long term (especially if we have a second kid). We’d like to get a 3bd place (I work from home and there’s a chance we’ll have a second kid).

Savings Rate –If we limit our housing expenses to $5k/month, I’m estimating that we’d be able to save approximately $80k (inclusive of retirement, college savings, and taxable) a year plus 100% of any bonus.

As I said curious about anyone that has been in a similar position or more generally any thoughts on what you'd do in our position.