I could see how it could get up to $16K with materials for a service that large.

If managing the STR is no longer sustainable @Robbie Shiver, here are a few alternative options to explore:Mid-Term Rentals: Consider marketing to travel nurses or corporate relocations for stays of 1-6 months.

This can easily be obtained by spending it on materials you will be buying regardless.

Alternatively if you feel confident in the higher value, I would ask if the lender is open to doing an independent appraisal ordered by an AMC instead of a desktop one. 

Those that own real estate will want to be active, those who are limited experience and time look at it as an alternative investment and want an expert to manage it just like some hire a financial advisor for their stock portfolio.

Just keep thorough records of your expenses—materials, labor, permits, etc.

I looked at one lot U could build on it but there is only a 5 foot path to haul material in.. :) and they want 300k for it.. 

We purchased a property in early October and are placing it in service this week (mid November).We had intended to run a cost segregation study and try to accelerate depreciation which we can deduct against our W2 (assuming material participation).However, we have been reading through the IRS guidelines (eg publication 946 on Property Depreciation) and there seems to be the concept of "short year" which would mean that we can only deduct ~1.5/12 of a year's worth of depreciation in 2024.Is this correct or are there any different rules for STRs specifically?

As an alternative, would a cash-out refinance, a home equity loan, or a HELOC make sense for you?

I would not invest in real estate with a retirement account.Its too much of a headache and likely not that much better as an investment alternative within a retirement account1) Real Estate provides tax benefits for individuals who own them.