There is a free website that I use to find the estimated short term rent based on Airbnb data.The same information you can get from airdna but you need to pay for that service.

I am planning to include the estimated property value and the funds that will be transferred into the business bank accounts.

The cash flow borrowing full cost via heloc will be marginal, possibly even negative if using realistic expense estimates (I.e. something near the 50% rule).  

Do I draft the contract price for higher than the actual build price that would include our estimated profit (sell price) or would a separate agreement between the lot owner be sufficient enough that outlines the deal since we don't know the actual sell price until it goes to market?

I think 5% is a pretty standard rate to estimate with, but beyond that you might be higher or lower depending on your approach to landlording. 

For example, their rent is $2000, they pay me $1000, I then apply the $1000 to the renovation project, which they estimate to be around $8,000.How should I write up the lease agreement as far as collecting the rents?

He is 54 years old and inherited approximately  $550k net of taxes.

I think the pricing should be approximately the same around the rest of the Bay Area. 

I should have approximately $400K after mortgage is paid off.  

Many cost segregation firms will provide free estimates of the accelerated depreciation along with pricing.