Based on your numbers renovation cost are about $126,000, however you are gaining about $110,000 in equity after renovations so the renovations do not seem justified by the market, as you are spending more then you would gain in value.

For most flips I do there isn't enough profit to justify splitting the profits.

Of course, doing this was a lot easier a while ago when people were re-fi'ing from a 4% rate down to a 3% rate....now, with rates going up, the numbers may not be as appealing (particularly if you're already at a low rate), but if you hurry you may still be able to refi into a rate where the slight increase in your payment more than justifies the significant growth in the rent revenue you can get from the basement (in my experience, a 1k sq ft basement apartment build in SLC would be in the neighborhood of $50k (assuming there was an existing exterior entrance), which translated to a couple hundred a month difference on the payment after the refi, but created an apartment that could rent for 1,300-1,500 --so, a pretty decent roi... 

These can also justify higher rental rates.● Competition: What are other properties in your area charging for rent?

I think that idea works better in hotter markets or markets where the work justifies the return (like O.C. or L.A., for example). 

Budget for it (called capital expenditures or capex) and make sure your rent covers it (ideally, the upgrades would justify higher rent anyway). 

You probably don't have enough to justify bringing someone on full time, or even part time in a significant capacity so you might be better off with a property management company. 

Is the rental market strong enough in Michigan, or more specifically Detroit and other large cities, to justify purchasing these cheap homes and just renting them?

The cost to buy-in is getting too steep to justify the rental profits.

You may have usury laws as well, again the MLO. can advise you as to state requirements.As a beginning point, I'd consider 6% to 8% I'd say over 3 to 5 years, but that is also depending on the buyer's ability to pay at that rate.Basically, doing seller financing you need to justify the terms and conditions of the contract and ensure that you are not seen as taking advantage of an owner occupant.