Alrighty - some other considerations:
Where did this friend of a friend convert homes into rooming houses? One of the major things that slipped my mind - many towns in Mass. have laws against brothels (an old throwback law still on the books). It is used in any case where more than 3 (I think, or 4)non-relatives are living in the same house - which is not the same as an apartment because they all have seperate kitchens, etc.. For instance - last year a girl came on the board and wondered why her and her sorority sisters were having such a hard time renting a multi-bedroom house. It's against the law, unless the house is already used for a rooming house and is grandfathered or if the house is on private property (like already established frat houses on university grounds). Ther are exceptions to the rule, of course, but it is a major hurdle.
Even in the event that you didn't run into this - many cities and towns already have ordinances against rooming houses (similar to the above mentioned brothel laws). You'd have to investigate the laws of the city or town you are looking in.
It really comes down to cash flow and legal ability on a case by case basis. And now for the old "If I were you" - run the condo idea by your friend or even suggest a three-family investment (so he could live there and the other rents could float the note AND give you additional cash gain). In that case he's still pay rent (probably cut rate) but he could also build a percentage of savings for himself in a "house account". Once the account builds, he is welcome to whatever pre-agreed percentage of the cash - to buy himself something nice or to bankroll his share of another investment with you.
You can always sell it if things go sour and you'll get a better return on your investment. Multi-families and condos have a higher return rate than rooming houses. And if you keep it, you'll always have a place to live (with your own bathroom)
Just some thoughts. I'm sure someone else around here has more experience with real estate investments and the laws therein than I do.