However, design in such a way that they could be split per current setback regulations down the line (separate water & sewer & utilities too).

Get good properties in good areas and get a good screening process in place.Other risks, include regulatory risks which I think are in proportion to the size/scope of projects you take on (if you're fixing up houses lets say before renting them).Other risks include common maintenance items. 

Lo and behold here we are facing a number of setbacks and delays and much happier we at least took the 12 month option.

I doubt you could force the buyer without the mtg being released, in spite of any indemnification offered I’d be talking to state/fed lending regulatory agencies about Midland’s refusal to record a satisfaction in a timely manner. 

never did anything in New York so I don't know its all specific to the jurisdiction.. the variances I have gotten have been for set backs  and a boo boo building into a set back.. density issues ..  

Often zoning requires "setbacks" meaning the house need to be at least X distance from the edge of the lot.

Also you have mentioned all kinds of restrictions and set backs such as hurricanes and so... since we are talking about flipping and not buy and hold, do you still think those will have the same significance? 

The superior investor has a plan that includes a strategy for dealing with unexpected setbacks.

With parking and set backs and the size you mentioned I would be surprised if you could get a 4-plex on it.

The vary by state.Consumer based hard money loans typically require more regulatory licensing that most HMLs don't have.