As for the ROE, the ROE takes into account a negative cash flow, but when you take into consideration the appreciation and the tax benefit, then even with a negative cash flow, the ROE can give you 12%. I used an appreciation rate of 4% (which assumes the property will be held over a ten year period) and then a simple tax rate (which really depends on who the investor is).
Like I said, a rough calculation. For effective use of your investment money, it is better to choose a property that has an ROE of around 25% or more.
