Over leveraging vs. getting in the market

[Lauren Taylor]

Hi, we have two homes and are looking at purchasing a third. One is a rental with a 1,700 mortgage and a renter paying $1,875 per month. One is our primary with a high $3,875 per month mortgage. We are looking at purchasing a duplex to live in half and Airbnb the other half for a year, while we rent our primary (for 800-1000 below the mortgage) Then moving back to our primary and Airbnb-ing both units. The mortgage on the duplex would be $3,700. Running numbers have us paying $800 less the first year than what we are paying now, to live in the duplex (even with the primary rental shortfall). Then in year two when we return to our primary, we would be paying the same as we are currently paying. After that the payment goes increasingly down. By year 10 we would be paying 1,000 dollars total out of pocket, saving us $2,800 per month. We are eager to jump in the market and we understand this is not a big cash flow opportunity. But rather a chance to grow our portfolio and benefit from increasing rent and home values. However we are concerned with over leveraging ourselves. We only put 10% down on the primary and we only would put 5% down on the duplex. If something goes wrong with a house; the few thousand bucks we saved per month would be wiped out. Nearly 10K in mortgages is a lot, considering we haven’t paid much off on them.
Is this simply a question of how comfortable we are with risk, or are there some numbers and information we aren’t considering. As a note, we live in a quickly growing and popular market. Any insight is appreciated.