One of the nice things about REI is that you can kind of take your time, invest some time and energies on the side and see if it keeps your interest and is sustainable. 

My longer term goal is to be profitable and self-sustaining purely through rental income, enabling me to be active as well in development for profit.

Make sure the things you agree to are sustainable.   

The only way to sustain your current lifestyle is if rents keep up with inflation.

What are some of the ways (strategies) to generate cash flow that can sustain my daily needs for now while building the business? 

There's not a lot of companies out there that could easily sustain a loss like that. 

Is there enough local demand to even sustain one?

While there may be no {short-term} motivation to the landlord to strive for more efficiency, our experience is showing mid to long term gains in lower turnover, higher demand (mostly via word of mouth) and, more recently, the ability to command better rents.... however, we'll save that debate for one of the sustainability and efficiency threads :-)

The idea behind this rationale is that if/when you decide to be more hands off down the road, the property sustains itself and is still cash-flow positive.  

My friend in the area is doing both fix/flips as well as buy and hold (I think he is copying me with the buy and holds:):))...realizing that sustained income is the key to financial freedom.