If you don't plan on paying cash and have to leverage with an owner-occupied loan product then you should set up your LLC as a property management company because you will not be able to borrow in the name of the LLC.  

Deposits from the tenant.Security deposits from the tenant in residential dwelling units shall be deposited in a trust account with a licensed and federally insured depository institution lawfully doing business in this State or the landlord may, at his option, furnish a bond from an insurance company licensed to do business in North Carolina.

We don't expect to collect money back when we send them to the collection companies.

And being in California, you really should be using licensed companies for everything.

We are considering becoming a private lender with them and I am doing some background research on him and his companies and wondering if anyone has done any deals with them.

A professional trustee such as Exeter Trust Company is the way to go if you want it done right, imo. 

They want them all jammed in large apartment complexes, run by large companies, in concentrated areas, away from them.

The specialist I recommend you have is an attorney to properly draft the documents and a title company to facilitate the deal.

Before the great recession, as a 22-year-old that knew nothing, I did a few flips and ran my own property management company.

As mentioned have an attorney or title company draft the note and mortgage.