...they're never that crazy when you end up confronting them.
We (my company) owns a vacant building with a large entryway overhang. We occasionally get squatters / encampments depending on the weather.
Once you start waking them up at 6am and stop calling them "sir" they all seem to magically understand exactly what you're saying and you generally don't see that particular bum again.
There are a few that are legitimately mentally ill and almost all of them are drug addicted...but far more of them act crazier than they are as a self preservation mechanism.