With 20% down the cashflow is likely zero. Rents cover debt service, maintenance, vacancy, management, travel, reserves, etc. It can take many years to get positive.
ROE drops because equity grows. The 1st year 4% appreciation on a $200k example is $8k against the $40k down making a 20% return. In the 2nd year the equity base becomes $48k and the 4% appreciation becomes $8320 giving 17% ROE. Year 3 would show about 15% ROE. The cagr (compound annual growth rate) is negative.
You can easily get derailed by a large expense, like a new roof or hvac, or it can go in your favor, like if appreciation jumps to 8%.
You could isolate your down payment and look at the return against it: ROI, Return On Investment. This does not represent your true asset (equity) return over time (but it looks good).
