Around here, the landlords who just say "go check it out, it's unlocked" tend to get frowned upon by prospects that we encounter.

If the borrower is taking rent but not paying you, then you are being scammed.

I would consult with a Real Estate attorney for the best way to handle this and to determine the level of risk you're encountering here if you choose to put it in an LLC.

Hopefully you do not encounter any large expenses until long after purchase but you need to be prepared in case you do.  

This is what I am encountering, in the current Mortgage Industry.

I can't say for certain why conventional loans are only to individuals and the HMLs you're encountering only lend to entities. 

Shapiro and a group of unregistered investment companies called the Woodbridge Group of Companies scammed more than 8,400 investors who thought they were investing with a hard-money lender.

I'm pretty confident that the plan I've outlined is reasonable and that they'll be happy getting payments on an account that is something on the order of 4+ years behind.The attorneys contact me back, stating that the original owner was something of a scam artist and has made many promises in the past that never happened. 

@James Wise great point about living a certain way -- personally I think I struggle in this area because I would live a certain way, and then encounter tenants who don't and it gets concerning.As an experienced PM, where do you draw the line?

There are some that do, and I hope you find one in the beginning to help you work through some items but over time you will likely find that you are in fact much more organized and detail oriented then 98% of the contractors and subs you encounter are.