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.