That explanation shouldn't be either of the following in my opinion: a) bad/low quality, b) scam, c) the developer doesn't know what he's doing or d) they can't sell and are desperate.

Further suppose i purchase a rental property, fix it up, get tenants, and return the rent into the LLC account, everything done legally and things are going great.Until (god forbid) my Custodian Company turns out to be a scam, a la Bernie Madoff.   

We all know about scams.

The scam artists will try anything to get your personal information.

The reason people may think you have a scam going might be because you don't come across as being fully knowledgable in the transaction.

I would never scammed anyone.

I haven't told the investor the address or phone number of the guy just so I don't get scammed.

An unsuspecting REI comes in and buys it, only to realize they have unleashed a deamon.

That is the difference between operating honestly or being an unlicensed broker screwing over unsuspecting sellers.

The problem is attending seminars that are run by scam artist who sell you something for 10's of thousands of dollars with hype and singing and dancing that you can get here for free.