Renting individual rooms of a SFH

[Karan Rekhi]

What are the do's/don't of renting individual rooms of a SFH as opposed to the whole house to a single family?

What do I need to do to avoid any liability/head aches in case of tenant vs tenant conflicts?

How should I structure lease for such a house sharing set-up? Are there some standard leases for room rentals?
 
I see two options:

1. I take the sole responsibility of finding individual tenants for each room, and hope that the tenants will coexist peacefully and each tenant takes responsibility of paying his/her share of rent on time and fixing damages he/she causes.  
2. I create a structure where the tenants are incentivized to find good apartment mates (obviously approved by me) and behave. The incentive I plan to put in place is that the rent will be $2200 per tenant if the house has only one tenant, $1200/tenant is house has 2 tenants, $900/tenant if the house has 3 tenants. It will be a win-win for all. 
 
Any thoughts on two? Has anybody tried something like this?

[Steven Foster Wilson]

@Karen Margrave We are currently renting our Duplex on OSU campuses, room by room. 7 rooms in total. One important thing here is finding like minded tenants. For example I have only college aged people living here, it'd be pretty weird if I had 20 year old girls and a 40 year old male.

An important rule is establishing quiet hours, this helps everyone out in the end.

Some of my tenants have complained about dishes and what not, but I encourage them to address that with their roomate, and it generally works out.