I hear you on the limited upside, I thought about eliminating the option, but then I'm giving up all equity.

Market and his wild irrationality to your world.The skillset to successfully invest in equities is way more difficult in my opinion for that reason.I recommend reading Intelligent  Investor By Benjamin Graham, Snowball by Alice Schoder (Warren Buffett autobiography)  Poor Charlies Almanac to get a good start.CHECKOUT crowd funding alternatives:@Jilliene H. is way to modest to point out that her crowd funding portal is first rate and should offer the direct investment alternative that would eliminate public market volatility.

You can eliminate the majority of these with some pre-screening.

Additionally, this can help eliminate applicants quickly based on your minimum requirements for credit score/income/etc.2.

Thorough screening and professional management will eliminate 99% of these types of issues.

Is there any numbers/calculations that one can use which eliminate taxes from the equation?

So by going into negative cash flow, you are eliminating one potential profit center, leaving the speculative profit center, and forcing the need for that speculative profit center to offset even more in expenses than it already would've needed to (the negative cash flow) in order to be profitable.So, it's a risk thing. 

With rent control extending to single family homes this would likely be eliminated.

It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.Make sure your property manager is a licensed real estate brokerage.Understand you can not eliminate all risk, only mitigate it.

You shouldn't look at it as an eliminated expense, its just an expense you are paying to yourself.