If the person putting the deal together is above-board, they only want investors with whom they have an existing relationship, who is sophisticated enough to understand the risks, and to put it bluntly, can afford to lose the money they put up in the unlikely event that the investment fails.

It sounds like your lease is too sophisticated for the renters, or the renters are unfamiliar with leases based on your second post.

Estates....or out of state owners with renters....more of the weird stuff where there could be a reason they're not paying taxes....owner is in prison, owner died, owner died and kids living in the house, weird lenders who might not be all that sophisticated or automated, ones that had previous tax lien loans, out of country owner, etc.In my experience it is extremely rare that you see a 2000 or newer built house with no loan that is in great condition that's worth $200K actually sell for $10-20K in back taxes.  

@John Geldert we buy materials in large bulk, and surplus auctions and that includes my payroll.

Most sophisticated private investors would require 20%+ returns for development deals (can easily get returns in the teens on non-development deals with large experienced operators); so, 8-12% is not a no-brainer...but investors like yourself do a nice job of securing those types of terms.

Two things I am trying to accomplish:1. trying to avoid/reduce the fees 2. keep the process as simple as possible for my lenders as they are not sophisticated investorsI was thinking the best way to do this is create an LLC (syndicate LLC) that my lenders invest in and keep their money there.

The drawback as you've mentioned, is that they're only allowed to accept accredited investors.A fund that is offered via 506(b) however, is allowed up to 35 non-accredited, "sophisticated" investors and 65 accredited investors with a maximum 100 investors combined.

It seems now the deadbeats are getting more sophisticated.

John is a very sophisticated investor.

You have absolute liability over your real property, which means that if someone is hurt you will be liable for their damages, not having a business practice exclusion in your lease may be presented as negligence in court, with you being a sophisticated landlord/investor/business owner and your renter aswell as the injured daycare student being portaied as victims of your negligence.