I would make sure you are very clear with your client what the rules are in the areas they are planning on purchasing an STR.

You can still find cashflowing properties in the STR areas people have been investing in, butit is just hard to find "great cashflowing" properties producing +25% cash on cash returns when planning accordingly for capex.

I plan to buy my first rental property this year

Planning on enforcing fines and using a camera to monitor the area.

We had changed everything in our plan, I mean everything, and we had to press for an absolutely insane price, knowing we would have to accept whatever comes closest.

(Currently own a 4 unit rental and 8 acres planned for development in the near future).I have just received my closing disclosure and boy is it ugly.

You could do cash for keys, to just end the lease mutually, or even see if they were interested in doing a payment plan for the rest of their lease. 

There's 3 floors of old apartments upstairs we have an architect working on a plan right now.

I plan on updating the whole property and moving into one of the units. 

It’s not about who is going to be right or wrong, Just understand that the risk has risen dramatically and plan accordingly.