Sorry for the delay. Missed the replies. At this point, 3 years in, I am happy with my decision to approach things this way. It's given me a real hands-on feel for the business. A couple of things I learned along the way...
1. Your neighbours that share walls/ceilings/floors with you are also your tenants. This requires careful relationship management as it is important to treat them as your tenants, in a very professional manner, but at the same time keep in mind that you also have to live with them. Normal neighbourly disputes could quickly end up at the Landlord Tenant Board.
2. It is important to keep the end goal in sight. For example, it is fine to make some upgrades to units you are living in, but if you aren't planning on staying there long term, keep in mind who will be using it. Perhaps the most expensive dishwasher isn't necessary. Do I really need to put in hardwood or will a decent lamanent be a better fit? Obviously this depends on your target rental market.
3. Taxes become a little complicated when you are living in part of the property for part of the year, and the personal residence exemption and capital gains/depreciation needs to be sorted out. Definitely advise having an accountant familiar with investment property.
4. It also gave me the chance to learn the parculiarities of each property like which pipes have a propensity to freeze in the winter, that the hot water tank labelled Apt#1 is actually connected to Apt #3, which outside power outlets connect to which apartment, when your tenants are smoking pot in the living room where the upstairs apartment will smell it, etc.
This experience has given me a good understanding of how property management works, given me an opportunity to try my hand at some renovation projects, and allowed me to pick up a couple of investment properties before buying my own house. I felt way more confortable investing in a property and having tenants for the first time when I could keep an eye on it every day. It also makes it a lot easier to arrange viewings of the other apartments. Overall, so far, so good.