House hacking legalites in NY

[Ricardo Llanos]

I recently met a lady who owns 2 house in Brooklyn NY that are completely chopped up inside. She has about 10 bedroom across the 1st fl, 2nd fl, and basement. All vary in sq ft. She rents each room for around $600 - $1000/month each. Her tenant are undocumented folks awaiting citizenship, recently divorce folks and short-term travelers. There's no officially lease, but you have to be referred by someone of trust to rent in one of her houses. 

As a new yorker, i have this craving to invest in property here but the inflated home prices never made sense to me. However, with this type of strategy, the cash flow math does. I'm curious to know if this is at all legal. Is this some form of house hacking? Looking for some opinions on this strategy and whether its a feasible investment strategy.

[Frank Chin]

No, it violates housing codes. I grew up in Astoria, Queens and my mother-in-law in Elmhurst NY. They have neighboring landlords turning SFH into rooming houses, renting out around 10 rooms in these properties. My M-I-L thought it was funny that one such property across the street from her was found out by the city, forced to close the rooming house, and sold, because the owner was unable to make money renting it out normally. The funny part was the owner never told the buyer of the issue, the buyer thought it would make a nice rooming house, rented it out again as such, and was promptly shut down again by the city. There was a snitch that lived on the block, someone who's a friend of my M-I-L.

I own several duplexes and 3 families through the years in Nassau County and Queens, and normally, 2 or 3BR rentals should be rented to no more than 2 or 3 unrelated persons. There are issues with housing codes as well. Also, having so many people in each property creates overcrowding situations and parking among other things causing neighbors to file complaints. Such rental situations are hard to hide and keep secret with so many people coming in and out of the property besides taking up available street parking.