Renting rooms vs. Multi-family

[Derek Luttrell]

Multi-family buildings in my area are expensive, and often need tons of TLC. For less than I am pre-approved for, I can buy a fully updated 3-bedroom house or condo, and rent out the other two rooms. With the help from my roommates, I would only be responsible for $400/month on the mortgage (I currently live downtown, and my housing expenses are $950/month).  

I know this isn't eliminating my living expenses, which is the ultimate goal of house-hacking, but it does significantly reduce them, all while hopefully building equity in an up and coming neighborhood just 3 miles outside the city. Also, if I move out in a few years, renting the entire condo would profit me at least $400/month (based on current rent prices, which increase pretty rapidly in Chicago).

Are there any tax implications to this? If in a few years if I decide to sell instead of rent all the rooms, am I subject to any capital gains tax, or not since I was still living there? Is house hacking a single family unit generally ill-advised? I am 25, and have no problem living with roommates for quite some time. For a much lower listing price than a MF, I can get a much nicer 3br space that will demand higher rent, without having to undergo any renovations.