Either tell them to remove it because it is a fire risk or upgrade.Do as you deem best and don't concern yourself with what the tenants think.

What I am concerned about is, if I continue to rent my 1br/ba apt, I will have thrown away $21.6k every year($1800x12months).

My objective is to have my payments go towards something rather than just throw it away, cash flow is not a big concern unless I decide to rent it out later. 

I do prefer this product to an FHA though as it will not have permanent PMI attatched to the loan like FHA does now.

I'm not as much concerned about discussing the pros/cons of the STRP business, but trying to get a sense of when is the return "worth it?"

One concern my lawyer brought up was that if your original intent is to wholesale the property and not purchase it yourself, this is basically a glorified Listing Contract which gives you the right to sell the house.

Some of my concerns include: No third party oversight of the underwriting process—REITs have equity analysts, quarterly audits and SEC regulation.

I was too concerned about the perception I was making with my offer and I did not go low enough.

From my numbers, the PMI was a deal breaker for an FHA loan - being a permanent PMI. 

The money we will get from the sale of our house will cover most if not all of this money needed, but we were concerned with not having any other money to invest after purchasing the first duplex.