If you are simply renting rooms in the main living residence and have not separated them as investment only then same thing.If you have separated out part of your house as investment only then that portion could be used in a 1031 exchange to buy other investment property. 

What I want to avoid is something that happens here in expensive Vancouver BC, and that it where one person rents it and then gets their hommies in all renting a room each. 

While no one wants to live with others if they don't have to, it's a small sacrifice to make in the grand scheme of things.

my plan was to acquire cheaper properties in my area for around 50k  that I could rent out right away that had room to create value by adding more units  .

It shows the minimum sqft for the number of occupants.For 1-2 occupants: 120 sf living roomFor 3-5 occupants: 120 sf living room, 80 sf dining roomFor 6 or more occupants: 150 sf living room, 100 sf dining roomRegardless of the number of occupants, for bedrooms the rules are the same 50 sf/occupant and a min of 70 sf for one occupant.If you have that many people coming and going, you need to remind the tenants that only those listed on the lease (and their children under 18) are allowed to live there. 

Here is the back story:I do room rentals near UNCG in Greensboro, NC.

I think most do in fact.. can be another person your in partnership with it could be your parents grand parents other relative.. the big wholesalers that make what I consider a decent living IE 500k net to the owners plus a year doing this will spend that kind of money.Plenty will spend a lot less and make from zero to 100 to 200k a year net.. 

I am house hacking (renting a room) in my house.

I’m planning on taking the money to fund my next deal,  I’m in Cleveland though, and the home prices are so low that a couple grand means a lot more than in some other markets like the west coast, where $2,000 fee to pull out an extra 30k makes more sense

I just closed on my 4th two unit househack but have agents on my team doing both the multifamily and single family rent by the room models.