A refinance immediately after a 1031 exchange of the new property is pretty common.  

What kind of hidden obstacles are there  such as zoning restrictions?   

But it also seems plausible that it is some kind of scam. 

Is this something that is common?

The existing mortgage stays in place and the buyer takes over the payments and the deed is transferred to the buyer.The most common stipulation found in a “subject-to” contract is that of the buyer completing a home inspection.However, with home sales becoming more difficult and find the need to sell their house for far less, buyers are harder to find and those that make offers are not able to complete the purchase because they face difficult lending criteria.This is where subject-to an existing mortgage comes in, what this means is that we the buyer of the home takes over the title to the property, but the seller retains the mortgage itself.

I've been discussing these kinds of deals with the someone at Sprout.

Is there some kind of break even on what number of units make a development cash flow positive or a good investment?  

Going to the source:https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031(Read "What property qualifies for a Like-Kind Exchange?")

We tell new people all the time to try to hook-up with more experienced folks, and learn from them, and so it's strange to me to hear that frequent posters would also lack the common business courtesy of a response, even if just to say no thanks.

This is common.