You will need to be on your toes at all timesYou will run into set backs (often)You will need to evict peopleYou will need to throw families onto the streetYou will make children homelessYou will have your house damagedYou will need to hire a team of highly skilled people to be your eyes and ears on the groundYou will pay a premium for services provided on your real estate portfolioYou will be harshly judged by those outside of the industryYou will need to make decision based on the best interest of your business and not your feelingsWorks out great for some.

If only for the purpose of negotiating and convincing others to buy based on your speculations of what you can get once built out. i.e. if lots are small and set backs are large then it might only limit those lots to the SFR or really small duplex instead of a 4-plex. 

You will need to be on your toes at all timesYou will run into set backs (often)You will need to evict peopleYou will need to throw families onto the streetYou will make children homelessYou will have your house damagedYou will need to hire a team of highly skilled people to be your eyes and ears on the groundYou will pay a premium for services provided on your real estate portfolioYou will be harshly judged by those outside of the industryYou will need to make decision based on the best interest of your business and not your feelingsWorks out great for some.

However if you go outside of city limits then the county has more lax requirements and they are subjective about what is an MHP versus what is not - sometimes it's 4 homes, sometimes more.Most water wells can support multiple homes, it's more about the treatment equipment sizing (e.g. chlorinators, filtration systems) and ability to keep up with demand, and also regulatory requirements of water testing once you have 15+ homes - it becomes an EPA thing instead of your state DEQ. 

The text of the proposed House Bill regarding accredited investors is: "any natural person the Commission determines, by regulation, to have demonstrable education or job experience to qualify such person as having professional knowledge of a subject related to a particular investment, and whose education or job experience is verified by the Financial Industry Regulatory Authority or an equivalent self-regulatory organization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934)"The last part is of most use, but whats an equivalent self-regulatory agency?

So I plan for 25% to set back. (5% each for cap-ex, repairs, and vacancy and then 10% for property management).

The main benefit of being "grandfathered" by using the existing structure is that setbacks and construction techniques can also be grandfathered. 

During the last downturn, the regulatory uncertainty in Washington had all 4 of my community banks no longer lending for portfolio or commercial loans.

I bit usual layout as its set back from the street with its own access lane and backs to a large apartment building and has taller wood fencing, but the owner has lived there for 12 years and is 73 now and tired of playing landlord with his neighbors/tenants - he has the usual tenant adventures going on right now, such as an eviction and probably isn't a thorough tenant screener. 

As an aside, could it be subdivided where each property would meet current setbacks from front/rear/side lot lines?