We are also in the process of selling and moving to a larger home so they are essentially covering our mortgage while we travel.My question is, since our house has appreciated $170k since we purchased it 5 years ago, do we lose the capital gains exclusion if we rent it to them for a few months in the interim.

If you reject them, you lose half the renting population.

I fear of going over budget or losing money because of property prices and materials prices.

I started as a mechanic worked up to finance to start my departure from working for someone else so I can work for myself and enjoy my wife, kids, and grand kids.back to how to do this why you work hard.1. bullet proof pre qual2. know in advance the area your interested in.3. make offers subject to inspections.. 4. once YOUR IN contract then go with the inspector and view the home then.. with the quality of pictures these days and if your in a hot market trying to wait for you to look at it your going to lose deals like crazy.. 

Expect to lose money for the first few years from a cash flow perspective.

In fact, I would argue the moment you are sued you lose. 

We have a young family and don't want to get in over our heads on debt should something go south (and don't want to be over leveraged if we decide to move to a new primary)40% was where we felt good about the cash flow, and can be relatively sure we wont be losing money each month even if something unexpected goes wrong, and we have it sitting in the bank from a stock sell off.

Also, you can gain/lose money quickly in both markets. 

Or risk losing your asset. 

you can lose 1/12 from yearly revenue in this situation.