Depends on what you mean by privacy.
If you don't want the tenants in the building to know you're the landlord - then you can hire a property management firm to deal with the tenants and don't say much to the neighbors. This obviously costs $. It's not ironclad of course, but is probably suitable for the type of privacy you desire.
If you want complete anonymity but still really want to live in the same building as tenants then I suppose you could purchase the building through an LLC or some other device, but that doesn't seem like it's worth the trouble.
It's really a lifestyle choice. Make sure you do some research on what the market rents are and such to make sure the numbers are what you think they are. I don't think multi units are more or less risky than single families. It all depends on the deal, the market, etc.
The website biggerpockets is a place to start, but you'll have a hard time finding deals that meet some criteria found over there. MMM posted about this here:
http://www.mrmoneymustache.com/2011/10/10/lets-buy-a-foreclosure-episode-2-what-is-the-50-2-rule/Good luck.
P.S. What city are you looking in?