I've used holiday lets 3 or 4 times per year for the last 20 years and also act as accountant for around a dozen or so, so have quite a bit of experience on both sides of the fence.
Yes, agencies cost 20-30% but will grow your occupancy and income massively - one of my client always did everything herself and was against agencies, but then she moved to Scotland due to work and had to, reluctantly, use an agency that charged 25% - her occupancy/income increased by 50% overnight so she ended up far better off and now she's relocated back to living close, she still uses the agency!
Doing it yourself is fine, but you need a professional website with booking calendar, credit card acceptance, etc., as people these days want to book and pay the deposit online - they won't want lengthy phone calls or email chains - people also want to view and book at weird times, like midnight or Sunday afternoon so again, website booking is really essential. A professional website can easily cost a few thousand.
As for being next door, it's really something I'd not broadcast. When we've found ourselves close to the owners, it's been quite off-putting and I now try to avoid them. You get the feeling you're constantly being watched. If the property is properly kitted out and well maintained, there should be no need to contact the owner. For most of our recent holidays, the keys have been left in a key lock outside so we've had no personal contact at all. The owner may well have been next door or across the road, but we would be blissfully unaware, just how we like it.
Worst one was were we unwitting rented someone's home - they just moved out during the six week summer holiday to a local cheap B&B! - They were constantly back at the house, we'd get up in the morning, draw back the curtains, and he'd be there watering the garden, or we'd come back after a day out and she'd be hanging her own washing out in the garden. It was really awful!
One thing I would caution is the rapid increase in holiday lets - it's becoming the new "BTL" craze so the market is getting pretty saturated, so all the more reason to do your own research. You can see other peoples' occupancy levels by looking at their bookings calendar on their website, you can also see their charging, photos, fixtures, fittings, equipment and consumables they provide, etc. You can also see how many are dog friendly and how many don't allow them - few people don't care - if you want to take your dog, you need dogs allowed, and if you don't most people want a dog-free house due to the lingering smells, etc - you won't get many people without dogs in a dog friendly house.
I would also echo the poster above about the costs. You'll be very surprised at how much you'll spend on cleaning, maintenance, replacements of damages/theft etc. People on holiday, especially bigger parties with children, etc., won't be as careful as they are at their own home - they'll also probably spend more time than at home and more likely to have cooked breakfasts, cooked evening meals, etc. There'll be loads of broken crockery, marked walls, stained carpets, etc. You also need decent equipment - cheap washing machines, kettles, toasters etc won't last so you need reasonably decent brands.
Finally (sorry gone on far too long), don't just put all your own home furniture, crockery, cutlery, etc into it - people want quality. I've been in some horrors where it's clear that the home was either an elderly relatives and they decided to keep it all and rent it out "as is" rather than clearing their belongings out - to the extent of all kinds of hideous bric-a-brac everywhere, mismatched crockery & cutlery, etc. It's also obvious when people have bought a new sofa or bed for themselves and just put their old cast off into the holiday let and then you have the ancient bedding and towels so old they have holes in them. Sorry, it's not good enough. You need to be putting new or nearly new into it - it needs to have "show home" quality if you expect good feedback, good trip advisor reviews and repeat business.