There is too punitive measures and shorter time horizon for that loan to mature and eat away at your equity buffer.

What we need though is a standardized way to measure the metrics.

@Reesey Ann - To this point, you might want to invest in some security measures to ensure this does not happen again.

Having said that, there is no problem having SMART compassion and taking safety measures (15 months rent in an escrow account). 

The homeowner measured  WRONG .   

A few things you could consider:House Rules: Make sure you have clear, firm house rules for your STR guests regarding noise levels, shared spaces, and respecting the privacy of your LTR tenants.Noise-cancelling measures: You could invest in things like soundproofing the walls or adding landscaping (like thick bushes) along the privacy fence to further dampen any noise between units.Separate Access: If possible, ensure that the STR and LTR tenants have separate entrances or parking areas.

The appraiser isn't an engineer and I wouldn't trust their measurements.

You cannot invest what you do not have.Initially before you invest, your success is measured by how much you have in (for instance) your Vanguard Money Market Fund, or an FDIC insured Money Market account, or stuffed inside your mattress, etc...

This is by design because I realized I was very far behind on my retirement savings and had to take drastic measures or I was going to end up working until I die.

Maybe do it officially for good measure.