@Allan Wu take into consideration that tenants are not going to be as careful as you would be, so make sure your lease states no flushable wipes, paper towels, feminine products, etc., that easily clog and that they’re responsible for repair if used.

But they even stop and chat with me while I'm up cleaning and I'm able to check on them, make sure everything is good and see if anything else needs replaced like TP, paper towels, etc.

Or would they be equally content with paper assets in the future?

You get the benefit of 2 years+ of appreciation, tax free gains, protect yourself from buying in a crappy neighborhood because it looks good on paper - you're going to live there...the best test for a good investment location is if it is a desirable place to live - and your risk of running out of cash is lower because you can take your time.

I have one tenant who on paper takes in more than enough money to cover rent, but she's always having problems because in her words, if she has the money in the bank, she spends it.

As long as you have a primary housing expense (either renting or own) you will be able to use 75% of the appraisers opinion of the future rent. and you will be able to add back a decent portion of your paper losses on your tax returns for the properties you already own using this form:  https://content.enactmi.com/documents/calculators/Form1038.C... 

Their paper assets, on their paper accounting, can't pay the bills because they lack the paper to pay them. 

Looks very good in paper. 

I was trying to go for cash flow (on paper)  but I'm losing money every month, not sure when these properties will stabilize.

My understanding is that you don't need a license to buy any paper (notes).