After considering our options and feedback from contributors on MMM, I think we are going to buy a 3 bed/2 bath single family with a 2 bed/1 bath ADU and live in the ADU for at least the first 2 years.
Most of the single family homes on Kauai have ADU's attached, but most of the ADU's are 1 bed/1 bath. However, there are a few single family homes that have an ADU that is 2 bed/1 bath. We currently live in one now. Our plan would be to live in the ADU for the first 2 years and then move into the main house.
If we put 20% down on a 500K house our total mortgage payment with taxes and insurance should be around $2150/month. The rent on the main house should be around $2000-$2300 depending on what we find. As a result, we have chance to have the rent on the main house cover the entire mortgage, taxes and insurance. The market rent on a 2 bed/1 bath ADU is around $1500/month, which is what we currently pay in rent.
However, in order to put 20% down, I need to re-fi one of my existing rental properties. I haven't decided, but I am leaning toward option #1. We currently have 32K in cash.
Option #1:I am 5.7 years into the loan on the Florida house. It's currently worth 235K and I owe 77K at 4%. We would probably re-fi into a 4.25% non-occupancy loan. We could pull out 105K.
Option #2: I am 8.3 years into the loan on the Colorado house. It's worth 365K and I owe 112K at 4.75%. We would probably re-fi into a 4.25% non-occupancy loan. We could pull out 175K.