I would be concerned that they would not pay the rent on time.However, if they do not have a credit score then it likely means they are able to pay cash for their expenses and do not have any debts.

I'd like to lay out my plans/concerns and see if anyone has any feedback I ought to be considering.I'm 30 y/o, no debt and about $65,000 in savings (of which I'm comfortable putting about (55,000 into real estate at this point).  

Is my concern much ado about nothing?

As long as the borrower is a majority member/owner of the LLC, and the payments are being made, the lender isn't usually concerned...they want their money.Where you could run into a problem is if the borrower leaves the LLC. 

They intentionally deceived you, so why is your primary concern their feelings? 

On a serious note you have a right to be concerned.

So, I have read several books and posts on here concerning offsetting income tax with passive loses or depreciation from rental properties, but I am still a little unclear as to how that all works and if I can actually use use rental property losses or depreciation to offset my house flipping taxes. 

I've found this book extremely informative in filling in questions about uncertainties regarding numbers, and if you base your numbers on the formats outlined in the book, you're much less likely to make a foolish investment.Just my two cents... and hopefully it's worth more then that.

He is not answering calls, texts or emails and is extremely upset by the divorce and blames everyone in the group.

I have been nothing but determined to get into real estate the more I listen to the podcasts and the more I read the forums here but at times feel overwhelmed when looking around, and am concerned about buying in an area I know little about.