This is not what you are suggesting.  

For example, if you paid $500k for both houses, and yours is 2000 sq ft while the rented one is 1000 sq ft, you could use a simple formula like $/sq ft.

You can Keep it Simple and raise the rent by 4% every year (inflation is historically under 3% so you should make out ok), or you can index to CPI, or you can index to something like military BAH or GSA per diem.The other option is to just do one year leases and renegotiate. 

My suggestion, is you visit all these potential locations with your family, and see which area calls to you, which areas you can see yourself enjoying, and allow the STR/MTR strategy take the second seat to your enjoyment and lifestyle vision for you and your family.

We have been using AirDNA data and their suggestions for up and coming STR markets.

I suggest you call the underwriter directly or contact them via the email contact provided in the policy and pose the question. 

If your State law allows it, you can ask for 2 month security deposit if you think they may become high risk or you can simple move onto the next application.regarding the mortgage in question and monthly debt payments?

I have been wanting to invest in real estate and he suggested that I become a hard money lender. 

We both got in trouble for simple battery.

Thank you all for your great advice and suggestions!