You need to first determine why you want to do real estate investing and then set some goals to match that. 

However, if after the cash flow questions above are determined (not guessed), the answer projects a negative cash flow, then the answer is to NOT buy the property. 

I reckon you need to determine before you buy what will be its outcome.At least, that's what I suspect any potential investor will demand (in writing). 

How is value determined for a construction project and for forced appreciation - is it something I can build a spreadsheet for eg calculating cap rate or is it something that can only be done by professional appraisers?

Even if I know what rents I'm going to get I still need to estimate the cap rate to determine the value, cap rate is based on purchase so how does that equation work?

It will be critical to determine if they intend to include an "amortization" clause, which will require existing STRs to come into compliance (or seek to exist) within a certain time frame.

Swetha - Seems like one of the most important aspects is clarifying how you are determining the ARV.

@Morgan Painter  To answer your question, the first step would be to review the income and expenses to determine the NOI, and compare the asking price to the market capitalization rate for the area.  

Start by determining what you want to buy and where. 

Your story hits home with me because my wife is a full time nurse of nine years and is currently at Cleveland Clinic.