This means there would be a total of 5 kids, 2 adults, and 2 pets in a 1000 square foot home. 

From reading Millionaire Next Door awhile back, the author recommended total mortgage debt to be no more than double your annual income (pre-tax).I was close to this when purchasing our first home a couple of years ago.

But be sure not to be too cheap on furnishings, bedding, electronics, etc... obviously be smart, but putting the cheapest stuff, or bare minimum will not get you contracts like a vacation rental would. 

Each unit is roughly 800 sq feet (there are three total units).

I have bought three properties in the last two years for a total investment of $65000. 

Obviously you are not adding a bath or kitchen so it will more than likely be ok but I know here in my area the health department goes by the number of bedrooms. 

Obviously, the lower your loan basis the more dollars will flow through to your monthly bottomline. 

I just acquired 3 occupied duplexes, a total of six units under a new LLC and a new loan, which are all managed by a local firm.

I feel like the way I have been doing things has been working fine, but I have only been doing this a few years, and since I was a bit shocked by the negativity I am hoping to find out if there is a general consensus on renting to room mates that I had totally missed.

Obviously she could care less.