These days I prefer to make money off those who can better afford it and won't be shattered by a setback. 

I was able to amass 8 SFR rental properties...got distracted with a nightmare flip in late 2015 / early 2016 (I posted about this awhile back)....but rebounded after that setback establishing processes, systems, relationships, and confidence one property at a time. 

Lending on an owner-occupied project requires licensing and opens the lender up to a bunch of other regulatory issues. 

If you're not clear on your role in the process and what your process is you will experience a lot of setbacks. 

Hello @Jonathan MorningDon't let this tiny set back discourage you!

It’s amazing how our overly regulatory government has everyone scared of their own shadows.

Can I include in the option to purchase agreement that the house is only to be sold with the minimum lot setbacks ?

There are lot size requirements, setbacks, possible sewer issues.

My MHP is located in a town where the setbacks are such that I can only get  10-12 foot homes on the lots.

You want to investigate any building restrictions the municipality may have related to zoning, setbacks, lot coverage etc.