I'm a big believer in aligning interests between the company and the employees.

For what it’s worth, we use this formula though we don’t often use 70%.Hans seems to have another method.Alternately, J Scott’s approach, described here, is a bit more detailed and more closely aligned with your formula.Either way, the current condition (as reflected by the rehab costs), purchase price, and ARV (or sales price) will almost always be considered by an HML for screening.

It allows me to invest in portfolios of 10 SFRs at a time that I co-own with the managers, and so I get reduced risk and aligned interests.  

Your strategy should keep aligned with the market...at least you are an innovator and you are planning to take over the market.4.

For B class properties and higher, great rental areas here in Orlando are usually aligned with great school systems. 

Thanks Chris - that all aligns with what I've learned so far.

Becoming a successful REI requires some personal sacrifice that is hard if your goals are not aligned.  

It is habitable with no major issues and so seems the better one to put on rent.How can I rectify this issue and how would one align themselves for the foreseeable future?

Its tough because we have the same long-term objectives (but at least our interests are aligned..) 

Better to align your incentives to your clients.