I rented out the next door unit of my duplex for several years. The success of it greatly depends on the tenants. We had three sets of tenants while we were there, the first couple was wonderful, and we actually spent a good amount of time with them around the fire pit drinking beers and grilling. When they left, they moved out of town, I think we’d still be hanging out if they were in the area.
The second set was a couple of undergrad douchbags, not sure what I was thinking renting to them. I knew it was going to be bad but for some reason the unit just wasn’t renting and I wanted to avoid a vacancy. It was miserable, loud music, smoking even though the lease said not to, parties at 3am on weeknights. I was able to get them out without legal action but it was awful.
The last set was two grad school roommates, again, wonderful.
So yeah, basically, if your tenants are good, it works well to have them next door. If not, then you’ll have a bad time. I would mention that you do need to keep them a bit at arms length, the first set I worried that we got a tad too close and I would’ve been uncomfortable kicking them out. With that said, they never pushed the limit with me so I didn’t have to.