For a smaller piece like that, not sure how creative you can get, but it all depends on what it's zoning is, access, proximity to other things, etc.  

On your tax return you would report the proceeds, subtract costs and proceeds paid to seller, then the remaining profit would be your flat fee.

Plus the cost of subdividing , and all that goes with it are for deep pockets . 

You are bleeding money now, but each year it might actually get worse depending on the financials. 

He's changing the terms of the agreement, and you can choose to accept it or reject it.I don't think it's fair to pass this cost onto the tenant just because you are unwilling to stand up to the contractor.

Over estimate the costs and not need them?

.🔹 Insurance Challenges – Even when insurance pays, it rarely covers the actual cost to completely rebuild.

I'm looking at monthly cost to seller vs. anticipated rental income, purchase price relevant to the ARV of the area and interest rate, balloon, etc.

If I had the business headquartered at some commercial or industrial space, I could deduct the entire cost of the space. 

Utilities cost $150 per month.