Then get a side hustle to supplement your income.

It sounds like you have some construction experience, so you have somewhat of a competitive advantage to make sense of those properties.Long story short, regardless of what rule your aiming at, those rules are simply a guideline.

What is a typical return that I should aim for when rehabbing and flipping?

Raise the rent to market, not close to market, there is never any justifiable reason to supplement a tenants rent.

He has had a free ride for too many years with his previous landlord supplementing his rent.

I will aim to increase by the 2.3% each year, but want to think long term. 

Why would you choose to supplement your tenants rent out of your own pocket.

REI) to supplement your 401k. 

I consider myself a successful investor because I am able to live off my rentals with no supplemental income if I choose, which is the goal of many in this forum.

Rather, it is a means to diversify your tax-sheltered retirement savings into asset classes such as real estate, with the aim of getting better results in terms of security/income for the retirement plan.Comparing investing in real estate personally vs investing in real estate with a retirement plan is apples and oranges.