I find myself in an odd position. I just got back the appraised ARV value on my first BRRRR deal and I was hoping for/ expecting a value of 140K. Well, it came back at 180K. I don't actually believe the home is worth that much.

My total cost to purchase and gut renovate the 3 bed 1 bath rowhome was 110K. I was hoping to simply cover my costs and have the 110K back to use on my next purchase and renovation. It seems like I will be able to borrow 135K as cash out on the deal, but I don't know if its wise to take that much out against it. There will be very little actual equity in the house if I borrow all the money.

If I only borrow 110K, my monthly principle, interest, taxes and insurance ( PITI ) will be $745. To borrow 135K will cost $875 per month. The loan is a commercial cash out refinance at 4.75% with a 5 year rate reset and a 10 year balloon.

The property rents for $1,350 per month. I was thinking it would be wise to keep my payment as low as possible, but this seems like an opportunity to borrow at a low rate.

I am trying to grow my portfolio quickly and I do have another purchase lined up. What would you guys suggest? Is there a reason not to take the larger loan? Any advice is appreciated! 

Thanks in advance!