Sold the back 0.4 acres and the house's basis problem went away

Bought a 1,340 square foot 3/2 four years ago at 168k on 1.1 acres at the edge of a town that has since grown toward it. Rent then was 1,340, rent now is 1,595. Unlevered yield at purchase was about 5.6 percent, which was decent for that year and would be hard to find at today's prices.

Last spring I recorded a two-lot minor subdivision and sold the rear 0.4 acres to a builder for 52k. Costs: survey 2,900, engineer for the plat and grading plan 4,100, county fees 1,850, a shared access easement drafted by an attorney 1,400, and 3,100 in commission and closing. Net proceeds about 38,650 against a house I now hold at an effective 129k with rent that has gone up 19 percent.

What nearly broke it: the county's frontage standard would have left the rear lot with a 14 foot access strip, and their driveway standard called for 16 feet at the apron. I got there by moving the line so the strip took frontage from the side of the house lot instead of the middle, which meant the house's side setback went from comfortable to 6.5 feet against a 6 foot minimum. If the surveyor had come back with 5.8 feet the whole thing dies, or I'm applying for a variance and waiting two cycles.

The second thing was the well. It sat almost exactly where the line wanted to go. I paid 800 dollars to have it located precisely before I paid for anything else, which is the single best 800 dollars in the deal.

What I'd keep: locate the utilities and the septic field before the survey, not during. And treat the setback on the remaining lot as a hard constraint from the start rather than a thing you check at the end. Tax treatment of allocating basis between the two parcels is a question for your accountant, and mine had opinions.