Don't be discouraged by the lower returns—house hacking is often about long-term wealth-building, and your primary residence can offset some of those mediocre numbers.Make sure you're accounting for local trends and realistic rents—sometimes expected rent growth is overly optimistic, or costs like repairs might be underestimated.

People are not choosing the cheapest housing available.

@Curtis OsaweyStarting with Section 8 housing can be a great strategy, especially since it provides consistent rental income.

My local municipality is changing ordinances to be far more restrictive, and I notice a number of houses up for sale that were STRs.  

I am located in Western AustraliaI have been exploring small multi-family properties and flipping houses.

There is demand for it and demand in this area for affordable housing, in a tourist area where plenty of people have vacant, second/third homes for seasonal fishing and hunting.

@William Weston You don't have to house hack, but if you could fit your family of 5 in a 3BR unit, would this work: https://www.realtor.com/realestateandhomes-detail/8104-Chesw...?

Renovated the inside of the house.

I would find properties, submit them to their portal and they would tell me what they would offer when the house was completely remodeled.  

My DP was around $20k and when I sold it I cleared over $200k.Good luck to you and let me know if there's ever anything else you'd like to know about house hacking.