Better Understanding COCR and ROE

[Brian Quist]

Hello All,

I'm an owner of a few different rental properties. 2 multifamily and 1 single family. Seattle/Los Angeles.
Feeling confused on how to accurately calculate Cash on Cash Return and Return on Equity rates

Question is, should I combine annual cash flow as well as annual mortgage loan pay down as these 

For example:

single family house. total cash invested $106k. Annual cash flow after all expenses is $10,000 (not great).
So my COC should be 1.6%.
But if you factor in the loan pay down the annual cash flow increases to 17,688.
which would make the COC 3%. (still not great).

which is it?
thx