Sounds sensible. In my country (and probably many others), if you and your neighbour own identical houses or apartments and have identical mortgages, and instead of living in your own one you rent the neighbours one and live in that and vice versa, then you can both offset your mortgage interest against the rental income and both be better off than if you lived in your own house.

If it’s better for you and your neighbor to switch houses and rent from each other the system is broken.

I accept the premise on the math, but "better off" is subjective. I'm in the UK so that's my context.

When your renter informs you of the boiler breaking, or a roof needs replacing, that's going to get thorny - "It was fine when I was using it/living in it, did you break it?"

Perhaps the latest round of updates to property law for renters come along and suddenly as a landlord you have to above and beyond what you need to as an owner; you both have to do X, Y or Z to your properties because they're rental and not a basic owner situation.