If your assets are paid off it is hard to ever lose them or get into financial trouble, however you are also young and have many years to make up any issues that could arise.  

You need to do a cash out refinance if you want to use the leverage its nice to have a property paid for but if your looking to LEVERAGE that means using the equity in one property to purchase more properties you will make more money in the long run but will have a payment on the one sounds like it is producing much income so could be a smart investment stratage.

Tell your friends to go to the local grocery store and ask in the produce department, where they can get lots of free boxes. 

@Mike Reynolds that is furniture to the left and carpeted stairs above. i tried for better pics but had trouble with loading them.

Some people might not even consider an investment if it does not produce 20%+ return vs. some others might be ok with anything above 10%. 

Trouble is you cannot rent it out on a regular basis.

The financing terms would negate most of my cash flow and produce an unacceptable ROI..

I think I would default to that model if the house-on-wheels, model didn't produce. 

@Dennis M. has it right - you're going to have trouble convincing a judge that you should be able to evict his buddy because he let him shack up there, especially since everyone will claim he was just visiting.

Having trouble finding a link, even google is letting me down.