Higher cash flow worth higher interest rate?

[Hannah Joy]

Working on a 203k loan to renovate detached garage into MIL. Current rate = 2.89, new rate would be 4%. Cash flow will increase once construction is complete. Cherry on top though is this loan will qualify me for a 25k grant for pre-dev costs. I'm cringing at the extra interest $ paid over time. Should I do it? Or should I try to do it slowly by myself to save in the long run. 

Thanks! 

[Martin Willard]

Cash flow is the only thing that matters IMO.  If you re-invest all the extra money you will come out more than 1.1% over time.  Plus putting the money into improving the rental will allow you to leverage it for more in the future.