How much to refi?

[Powell Chee]

Hello BP,

I have a situation and I wanted to see what people suggest.  

I recently purchased an out of state rental property for $94k, which includes closing costs.  In my original projections after doing a refi I was planning to cashflow about $250/month after all expenses.  

However the appraisal on the property came back with a $123k value and my lender is willing to refi upto $89k. If I refinanced my cashflow drops to about $100/month.

So would you suggest option A: roughly $20k invested into the property and $250/month cashflow?

Or option B: $5k invested with