Due Diligence on 1031/DST

[Mark H. Porter]

I recently received a property memorandum for a DST and was surprised to see the the offering was 23% over the appraised value of the property. It was explained to me that this delta was because of real estate and legal fees necessary for the transaction. I called foul and backed off.

Why would Uncle Sam have a tax rule that allows this?  I know everything is negotiable, but at a 6.5% return on my investment I’m not even eating down any of the principal for years.  Thoughts?