The value of the apartment is in the cash flow and IRR it can give me.  

Has worked well for me but finding motivated sellers willing to keep some skin in the game for 18 months to 36months is tough since there are so many buyers.

His skin would be: it's local to him, cross country for me,  so he'd manage and rehab, and the 29k is coming from him at $500/month til done.

There's no guarantee your partner, whose only skin in the game is reputation, won't rip you off, head to Vegas and go on one heck of a bender.

Or does this interfere with the "skin in the game clause?"

The best thing you can do starting out is build a strong team around you, and partner up with an experienced investor while you get some skin in the game for your first few investments.

Ceteris paribus, a person's motivation can be determined by how much skin they have in the game. 

It takes some thick skin and fist biting, but treating tenants with respect, no matter how nasty they get, having the "customer is right" (within reason of course) and  excellent customer service PM companies are outnumbered by the PM companies that want to fight with tenants.

Hi @John Scully FHA is a wonderful product because you can start with little skin in the game.

They've got to either put more skin in the game that makes you whole or make it worth your while from a payment / cash flow perspective.