Start from the current rents and subtract all expenses to get to a yearly net income.  

My 203k loan will be somewhere around $65K after down payment is subtracted.

I believe that's the whole point of the 50% to "estimate" the expenses putting half of monthly income for those reasons. and taking the other half subtracting the mortgage.

(Subtract thatfrom sales price toget loan balance.)

Additions or subtractions?

I will encourage you though to subtract 10% of what your realtor says. 

You want to upgrade your units to be able to charge that price and that is your bench mark: $700*100=$70K/mo gross potential rent.So, your immediate economic vacancy is $70K-$57K = $13K/mo or 18.5%Now you take your new gross potential rent and subtract physical vacancy of 10% (long term assumption), 2% for collection losses, 2% for bad debt, 1% for non-revenue units and concessions.

You need to find out what that home will be worth when renovated, then you subtract profit, and rehab costs.

Now subtract the mortgage payment and what's left?

Calculate how much is your Debt service payment and subtract it from NOI (50% rule) and you will get your Cash flow.