I'm looking to acquire my first co-living / rent-by-the-room property. I know that laws restricting the number of unrelated people who can live together are one major legal hurdle that this strategy faces in some municipalities. So far, that hasn't been a problem, but I am wondering if anyone has experience dealing with this strategy and shared housing regulations.

For example, in my talks with Evanston, IL, I've been told that while renting 3 or 4 rooms would fall under a traditional rental license, anything more would be treated as shared housing. In Evanston, shared housing typically covers transitional treatment facilities, shelters, congregate housing, rooming houses, care homes, hotels, dormitories, rooming and boarding homes, and so on. Unlike a traditional rental license, creating a shared housing facility requires city council approval and opens the project up to a public comment period, which means that you basically need to get neighborhood buy-in to operate the property. Has anyone operated co-living / rent-by-the-room in a city with shared housing regulations? How did you navigate the legalities there?