And they can do the same on theirs.If the property is actually owned by a partnership that files a tax return then the partnership could still do an exchange and purchase properties that each partner would like. 

Are people paying way above appraised value and getting 7 caps in exchange?

First, ask them what they mean precisely.

I suppose I cannot keep them from exchanging contact info to cut me out of the middle in the future?

I live across the lake from you and would love to meet up and exchange knowledge and talk about different ideas with you

I live in the bay area, Santa Rosa to be precise, if that helps at all.

Licensing Sec. 08.88.161 License Required.Unless licensed as a real estate broker, associate real estate broker, or real estate salesperson in this state, a person may not, except as otherwise provided in this chapter, (1) sell, exchange, rent, lease, auction, or purchase real estate I know that it’s not illegal for a non-licensed person to buy their own home.

For more precise info, you should speak with a local agent and/or local investors in that market who can guide you more precisely

Over time, future appreciation improves the profit on the property your tenants are buying for you and that profit is taxed at a favorable long term capital gains tax rate (think really great IRR) or the taxes can be deferred indefinitely with a 1031 exchange (why pay taxes if you don't have to).Tax benefits and appreciation are really just the icing on the cake; cash flow is the only real reason to own rental property.  

We are 1031 exchanging this property and are in the process of identifying properties in the Orlando area.