So, I've been away from the forums a LONG time, and have made some mustachian, less than mustachian, and totally non mustachian choices since then.
We have a big house, and live in an expensive market. Is us moving to a rental and then renting out our own house a stupid or sane idea for us? (Not much profit, but it would capture appreciation) (We don't want to get priced out of Denver) - Two adults, one child, two cats. We can move closer to daycare by renting. Additionally, we may need to move when I finish my degree and get a job, if we rent our house and have a history of rental income wouldn't that make getting a second mortgage easier? What am I missing? Tell me why this is a terrible idea, and if I am crazy it would be great if you could suggest alternatives! We currently aren't saving much money, and I would like to save more. Downsizing would be an added bonus. Should we just wait it out here until I have a job again and we know where we want to live?
TLDR details:
Finances: We have perfect credit, but are house poor. We also CANNOT get another mortgage here right now even if we sell, as although we pay our mortgage and still save quite a lot of money, we only have one salary and it isn't quite enough for a crazy expensive denver suburb house, as the floor of the market is so high. (A year ago I decided to quit my job, be a part time stay at home dad, and a part time CS student. (It's going great so far, near the top most of my classes, and have been told I will have no problem getting an internship, then jobs, after taking about another semester of classes including Algorithms. I also have a personal situation making education very cheap, so it makes a lot of sense and will hopefully pay out well in the next few years.) - Nearly all of our net worth is in home equity and retirement accounts, we aren't very liquid right now)
Life: My wife and I live in a Denver suburb, and had to move here from a different suburb a little over two years ago for her job (it made sense financially, and still does). We sold our house netting about $40k in capital gains after expenses. We lived with multiple roomates, and without thinking too much bought a house that is really far too big for our needs. "5" bedrooms (4 conforming) and 2700 sf, though a lot of that is a finished basement. It made sense at the time, but then we had a daughter, and the roomates moved away (One moved for personal reasons, the other left at our request due to raising a baby). We plan to have at most one more child, and that puts us at 3 to 4 people in a 5 bedroom house..... Given our busy lives we really DONT have the time to spend gardening, puttering around cleaning a too big house, etc. Honestly, even as much as I like living in a house, an apartment or managed property probably makes more sense. We do have free time, but aren't getting much value from that free time spending it on the house. Socially, we are fairly bad at putting down local roots. I would love to live in an area where it is easier, but I am aware the problem is 95% personal and at most 5% location. At least it makes deciding to move not very painful...
DW drives to work, I take public transit to my college. We have two cheap to run older cars, but usually the larger car stays at home. Her only decent daycare option (Per DW and relatives as well, who are helping pay, so it's non negotiable) is 15 minutes away from our current house, in the opposite direction from DW's workplace.... I will be doing the transport as much as possible but due to schedules will not be able to do as many.
House info: Zillow estimate is above $375k, we owe slightly over $300k. Smaller homes rent for above $2k, because we are in a desired school district (Cherry creek). Zillow estimates $2150. HOWEVER, there are drawbacks. The house has NO cooling, so we would possibly need to add some to attract renters, or accept the low end of income. Additionally, there is a fair amount of deferred landscaping that needs to happen, juniper bushes cover HALF of the exterior, and they really really need to go. That will be a big job, and I have been putting it off because I don't know what I would replace them with, and the huge root systems are scary... if we just cut them down it would be extremely ugly, although I suppose I could fill them in with some dirt and put down rocks.... (still ugly) - aside from that, and a 20 year old roof, it is in rather good shape, and doesn't have any other real deferred maintenance.
Rental finances: Right now mortgage + escrow is $1800 a month, of which $500 goes to principal. Rent conditions say we could bring in $1900-$2100. I am aware that this would be a terrible investment, but we are scared of selling and renting. (see below). The house has appreciated at over 7% while we have owned it.
We want to own a home when out child(ren) are older, probably in the Denver area, and if the appreciation here continues I would worry about being priced out of the market like has happened in some California cities. I do not know where my job when I get one will be located, but we want to be as close as possible to our jobs when that happens. Am I right in being worried about this, and wanting to hold on to a house? Would it be worth it in this situation? The ability to just move back into this decent house in a nice area is worth something.. Downsizing our lives would be good, but we would miss the garage and easy guest parking. Living 5 minutes from daycare instead of 20 would save 40 minutes a day of driving. Due to the cats and baby we need some space, but 2 bedroom 1000 sf apartments start around $1400. Homes start at $1900 which would be a bit silly.. Apartments farther away (close to us now) start at $1300.
Sorry for the wall of text, thanks for looking!