However, in the above scenario I would be owning the property but through an LLC with a few other investors. 

Good on you for using some common sense and intuition.“… do private lenders typically have a website or any way to verify who they are?

in your state is open house common ? 

What are the common fears of investors who write checks to capital raisers? 

Providing an update on this as we ended purchasing a house with these circumstances are are considering doing it again and thought it might be helpful to share the experience and how the concerns I noted at the time were addressed.Our scenario - Purchased a SFH in CA for significant price reduction with "free" rent to seller's brother for 3 years.1.

.#2 More Privacy for Tenants:With single-family homes and ADUs, tenants get the advantage of more privacy and independence compared to multifamily properties where tenants share common spaces.

This scenario is very restrictive.2.)

Feel like this is similar to your scenario. 

I realize you are an expert on 1031 but perhaps "interest tracing" concept is less common...

A secondary issue is related to the unknown heirs - no guardian ad litem was appointed (though I'm not sure how commonly that's required in Maryland as opposed to Florida for example), and no professional  heir search service was utilized.