The reality is real estate isn’t just about appreciation and cash flow—it’s also about survival when things go south.Many new investors operate on razor-thin margins, believing that rental income will always cover their expenses.

The condition was he would not charge for his labor in exchange for 50% profit at sale.

If your cost is $1mm, go for $1mm in profit. 

How much net profit in general should I look for on a long term buy and hold rental property like this?

I live in a lower-income area, so I figure that the better tenants you will get with a safe house, the ongoing safety the tenants feel, and the lowered risk of a break-in (when occupied or vacant getting ready to lease), and reduced headaches/vacancy/potential damage are worth the marginal up-front cost of having it installed.

Keep a close eye on the actual cost of rehabs and make sure your remodel stays in line with comps in the area to ensure profitability.

I would also recommend talking it over with a RE professional in your area to make sure the comps for profit are accurate because it could swing a lot with different profit projections. 

You have NO leverage, no matter what he builds or does not build, except for the developer saving some money in legal fees and cutting down on mesne profits damages.

Property Management takes a nice cut out of your margin, unless you have the systems built to do it in-house. 

Somebody else comes in and remodels, then sells and takes the profit.