Lots of small landlords with a multi-family house they also live in also find having a tenant make sense--though there are of course problem tenants.
In general, rentals (other than vacation places) just aren't a very good fit for houses. People tend to buy houses in part because they want to adapt the house and property to what they want. A rental house would typically have to be furnished; otherwise no one's really going to really have the right furnishings for it. And houses generally have more complex maintenance needs than apartments.
People buy apartment-like or town house-like housing in the form of condos/co-ops because they're willing to trade off the space and freedom for reduced home ownership headaches. But most people renting don't want either the incremental cost of a house or the implications of filling up a house and dealing to at least some degree with a property.