I'd be happy to have a conversation about good investment strategies for this area based on what you're looking for.

Based on the policy, I understand that. 

If the property does not provide for all three, you should not underwrite or make investment decisions based on the property operating as an STR.

However, if you work with insurers based in Northern NJ you will have no trouble finding something that works. 2-4 unit properties are in abundance here and are often being house-hacked. 

Determining exactly how beneficial is based on a multitude of factors, but a cost segregation study cost/benefit analysis on your property is typically free and can help you decide whether the benefits offset the cost of the study.If a Cost Segregation Study had not been performed on this $560,000 single family home located in Phoenix, Arizona, it would have had first year depreciation of approximately $20,400.

Insurance is likely 100 a month based on other parks I own in the area. 

Taking out debt for 2M is not something I can take lightly. are there any other possible options that I’m overlooking?

Fixed rate debt in an inflationary environment is a wonderful thing. 

Thats $5,500 in free money a year you can use to contribute towards any other debt such as the 2nd lien or student debt.

When I run the numbers on potential investments in my “monthly debt column” I have; “monthly repair costs”.