Inherited property - rehab complete - pay cash or cash out-refi

[Jay Crouch]

Long story, short: I inherited my dad's house in 2020. We lived abroad and priority #1 getting back late last year was to give that property a facelift and get it rent ready AND make it the start of a rental portfolio. Major advantage being: current mortgage = $0. It's paid off.

Total cost of reno: $55k - which I've already squared up with the GC. It's not yet been rented. House value is $250,000 after appraisal. Talked to lenders and the best rate I have for $1 - $85,000 is 6.125%.

My question: it's a bit of a squeeze for my wife and I (we need to purchase a primary residence) but we can just let this cash payment role and not take cash-out in a refi. 

Being that the goal is to always have this place rented and build a portfolio (yet, knowing there's some short term cash needs in 2023), would you guys:

1. Pay cash

2. Only take the rehab amt. in a cash out loan ($55k) and a.) use the rental income to pay the loan amt or b.) add to the 2nd property nest egg

3. Take the full $85k they're giving me at 6.125 a.) use the rental income to pay the loan amt or b.) add to the 2nd property nest egg