We don't work in the city typically, but this deal fell in our lap and with the price and how close it is to the lake we decided it was too good of an opportunity to pass up.

Hard to tell without knowing the place.Then you have to worry about changes to the regulations that could mean your place can't be rented short term.

It could also be that the cashflow is fiction and the locals know that a property in that area will not deliver. 

I know the interest they get is taxable I would probably have to set up a LLC with them being equal partners.

You can get the STR data from something like AirDNA and then check out what your competitors offer on sites like Airbnb/VRBO.Negotiations will also depend on their cash flow and how much of the business you buy.

I've considered an assignment / option agreement / not sure how to structure these.  

How's refinancing would work when the property is under LLC Vs your name?.  

I don't know your situation; if you have 6 figures in cash reserves and waiting to see what is next, go for it.

Do you know how much rent you should get? 

dont know fairmont but do know visio as they have made loans to folks that bought property from me so I know they fund and thats a big deal to me as a seller.