You could read 100 books and still need to learn more because certain things must be learned through trial and error.

Have you known this # for a while or has it taken you years to figure it out through the trials and tribulations?  

What you just described is a variation of what I refer to as a perfect system.  

One of our main goals is for our passive income to support a trial period for a riskier non-real estate business that my wife wants to run. 

The 5-6 room SFR still would be valued using comps as a regular SFR and financed as a typical SFR property though.I'd say about 10-15% of buy and hold investors do this or a variation of it.1 example would be one investor I know buys SFR's with 5-6+ rooms and splits the rooms for international students.Another example is a investor/contractor that builds 10 room rehab homes. 

Even though @Scott Trench improved the post with more levels of variation and clarity (and taking age into account), now we can find other areas left out: such as cost of living

At 100% financing (or some variation on that) your cash-flow is much less.  2.)

Then you are off to the races you want to run.When I read a variation on the "hate my job and I want passive income" I always think...so what?

Luckily, I haven't had to go to trial by jury or dealt with a BK filing... yet.

Rich Dad's Cash Flow Quadrant (I've a few of the variations, but this is one's my fave)2.