Create referenced node on the fly in Drupal 7? I have a node called "house" which references another node called "room". When I create a house, i.e. go to node/add/house, there will be a block where I can choose all the rooms I've created. What I want instead is to create the room on the fly, right on that page, and then reference it automatically. So basically, next to where you can choose rooms, you must be able to click a button that says "create new" and then ajaxically it must then open a an area on the page where you can create room.

Does that make sense? Is there a way to do this? I have the entity reference part of things setup, but before I look into trying to figure out which hook to plug into, perhaps someone knows of an inherent way that already uses entity?
You should use the Inline Entity Form module.

Provides a widget for inline management (creation, modification, removal) of referenced entities.
The primary use case is the parent -&gt; children one (product display -&gt; products, order -&gt; line items, etc.), where the child entities are never managed outside the parent form.
Existing entities can also be referenced.