One part of my exit strategy is to buy places that my family could live if necessary. If a property performs poorly and you have trouble selling, or if you experience long vacancies or consistency high expense ratios, you have options. You can put your residence up for rent or sale and if you get an offer that makes sense, take the offer and move into the under-performing property.
With proper planning and evaluation, you should only need to use that exit strategy in very dire circumstances, but I liking having that option as part of my insurance policy.
Concerning your specific list of criteria that would "force" a sale:
a) It is a good idea to be on the same page with the wife before proceeding. Just be aware that being in "the business" will present challenges. If those challenges put a strain on the marriage early on, there's a good chance that you won't be able to break even if you sell. So maybe an alteration to the plan could be: Look for a place that will meet our desired return even if we have to pay a property manager to manage it. Then try to manage yourselves, but if the marriage experiences strain, hire a property manager instead of selling. At least until you've held it long enough to recoup closing costs, etc.
b) Falling below 7% cash-on-cash : I'm curious what kind of cash-on-cash return you have estimated? If its in the 25-35% range, that leaves you a big cushion and you'd need to have a pretty bad year to dip below 7%. But if you are estimating 8-10% as an expected return, 7% is not out of the question. Now that you've defined 7% as the cutoff, it's important to make an accurate estimate what your expected return is.... so you'll know how likely it is that it will/won't meet your 7% worst acceptable case.
In short, it's good to have metrics that define successful/acceptable. But it's also important to be able to estimate feasibility BEFORE you give it a try. That's my take as a conservative investor.
Also, cash-on-cash isn't everything since it is affected by your down payment. I look at the cap rate (even on SFH) alongside cash-on-cash. I have 2 places that I bought for $45K, but one of them was on file at the PVA office for $55K and my lender's policy allowed them to lend up to 80% of the appraised value or current value at the PVA. I was able to buy that place with only a $600 downpayment. It's cash-on-cash return is about 295% while the other is about 30%. The cap rate on each is nearly identical, but cash-on-cash is skewed due to that low downpayment. Just a thought about using multiple metrics to evaluate performance.
-- Looks like as I was posting, someone else had a vote for considering a property manager...