great points. i did run some similar numbers earlier, except for some differences in the situation. i didn’t mention them clearly before or at all, so my fault. here goes:
1. i want to rent for a year, probably travel for two months without worrying about mortgage, taxes and maintenance. we’re still young with no kids and can take the chance.
2. i don’t want to net less than 400k. that means the absolute lowest offer i could consider would be 950k. anything less, you’re absolutely right, i will stay put.
3. my wife and i have our own small business, so far live/work from home. comfy but not workable in the long run. i’d like to focus on leasing a commercial space, business development, possibly hiring, etc to grow.
4. i could leave the profit in a CD or investment for RE only. our regular income would pay for rental+commercial space. meanwhile a CD would guarantee 6 or 7%, so i would probably gain more than sitting through a 3-5 year slump.
5. i could use previous construction experience in value engineering the second project. contractors are also far more eager to work well in a down market, materials are cheaper. i will only buy a 400k property, regardless of the market situation.

once my ARM resets, i will be able to pay but i can kiss 3 and 4 goodbye, and keep getting stretched to survive the slump…