We bought it in cash with 9 investors for a total of 970k contributed.  

Is it better to pay cash or leverage my liquidity to maximize ROI while retaining flexibility?

However, I do like the idea of bringing less cash to the table.Any thoughts between these two options?

Everything I see for the northern VA area and beyond market is just so unattainable; it seems like unless you have a down payment, that is way way way more than 20 percent, there is no way to get any positive cash flow.

And you could buy a second home a year later and still need less cash. 

When you are at market value does the property cash flow well?

Purchase price: $165,000 Cash invested: $35,000 That's right.

One is the cash downpayment and one is the work.

though; (1) there are tenants in the house on a two year lease (payments are enough to cover mortgage payments), and (2) the Seller wants the option to buy back the property in two years.

In my home market of Florida, our insurance rates have made it much harder to have positive cash flow on a CRE deal.