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I understand you may feel it is an invasion of privacy having him watching the houses since you don't really know what is happening. However, there could be some benefit to him being there.

Unless he is investigating you, which I doubt since you guys have approached him, he is more than likely checking out another neighbor. Depending on what they are doing, there could be a risk to your family, even if there became a domestic violence issue or some other more heinous type of issue. Additionally, if he is legit then he is not there to try and do harm to your younger siblings, and in turn kinda provides a watchful eye over them when outside if someone would happen to try and harm or abduct them.

So, bottom line, it might be a better thing to see if you can befriend him and maybe provide information (if you so choose to help with his investigation.) This would help you understand more his real purpose of being there and help alleviate the suspicions and concerns that he may be there for harm to your family.