Keep that as a cushion.

I like having some cushion between the "new" mortgage price and the expected rental price... but would you consider taking for cash out (if the opportunity presented itself).

I want to get something around $150k - I will look and get a sale for 15% under market value (I know this is hard, but that is my goal and I will do it - it will allow me to have a cushion and not lose as much money if the market goes down).

Just be sure that you have a lot of cushion to cover your costs, even if you lost your job or something big and unexpected happened. 

However just build some reserves beyond the next down payment so you have a cushion to fall back on. 

Additionally, we've been building up a cash cushion and have a sizable emergency fund as well as enough cash for a downpayment, closing costs, and some reasonable rehab to our future first investment.

I believe the short term rental market for just our upstairs would be $120+/night. 20 nights a month would cover everything and leave a $600 cushion for Capex, maintenance, and cashflow.

It can also provide you with a nice cushion personally for any unexpected short term financial burdens (as long as you have a plan to pay it back quickly - because you don't want to use it like a slush fund)

That is the cushion inherent in a live in flip or house hack opportunity. 

With today’s low rates locked in for 30 years I am renting it for $650 over my mortgage payment which gives me a comfortable cushion if the economy tanks and I have to lower the rent price.