A verbal agreement is fine to get the deal figured out on the front end, but definitely try getting that deal down on paper sooner rather than later!

The questions was whether my fire escapes are up to code, and since the Fire Department approval was given in 1940, on a small slip of paper, it's grandfathered even though it doesn't meet current codes.

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

We’ve been tossing around the idea of converting one of our bedrooms into a gym (treadmill, weights, bench, etc with towel and water service).

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.

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

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... 

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.