Or it could be a percentage of the profits that makes sense given the expected performance of the deal.  

Going with a local company can take some of the tasks off your shoulders and make it truly passive, but it likely will not perform even close to what you could do by listing it yourself on AirBnB and VRBO (or EVOLVE which does both).

Here is how I do it:http://www.biggerpockets.com/renewsblog/2010/03/10...To use the formula, you need to be able to accurately estimate ARV:http://beta.biggerpockets.com/forums/311/topics/73...You need to be able to estimate Fixed Costs:http://www.biggerpockets.com/renewsblog/2010/03/17...You need to be able to estimate rehab costs:http://www.biggerpockets.com/flippingbookAnd you need to determine your desired profits...I strive for 15% of resale value with a minimum of $15K (for lower priced projects).

That way I can give more accurate feedback on location and rent?

You want a bunch of security behind the note so if the buyer runs the property into the ground and it becomes semi or non-performing you have some options and recourse.Now if I was on the buyer side no way would I agree to such terms from the seller unless partially on some of them if the property was way under market.You have to find a balance where the buyer is happy and you are happy doing the deal.

(just had to make sure that url was not www.smallerpockets.)It is important that you have an accurate market rent forecast for your property- contact a realtor.

This way they will have an accurate picture of our DTI.

When asked he says that this other person is not living there but we have been over in his apartment (with permission) 5 times in the past week because of various work that needs to be performed and this other person is there every time we have been there to do work even when the tenant is not there.

Make sure that your pro forma is as accurate as possible to get the best numbers. 

You basically assign your rights to somebody else (investor) and they perform on the contract you negotiated.