I'm assuming that this situation wouldn't pass inspection, but one could argue that all the spaces the guests have access to (i.e. bedroom, bathroom) are safe and habitable + the guests wouldn't be exposed to the kitchen.Also, do the city inspectors inspect other parts of the home the guests won't access (i.e. inspectors check the basement for water infiltration even though no guests would ever be living or even going down there). 

I live in a community where half the people never lock their doors.

If you're doing FHA, I'm sure you know you have to live in one of the units.

Carlos, I am from Spokane and I house hacked the first 4 years I lived here.  

@Jackson Harris would absolutely love to get in on a call I don't live in Phoenix at the time I'm in California but I'm going there in the near future.

I live in California but am looking to invest in Texas, Alabama.  

.- The townhouse you're moving into is currently a rental, but you plan to live there two years for the 121 exclusion.

@Khaled Seirafi I've invested in several things in real estate: residential, commercial, small multifamily, mobile home parks, short term rentals, co-living (rent by the room) and I just bought an assisted-living facility.

You can't rent out a PO box and live there.And yea that sounds like a huge red flag to me. 

It's just that there's not more than enough places for everyone to live *exactly* where they want to live.