Understanding Principal Pay Down Impact On Return On Investment

[Marcell L.]

Hello All - Want to see if I am correct with the following when trying to understand only principal pay down  and its impact on returns.

Keeping numbers hypothetical, round and simple.

100K house

20K  down payment 

Cash Flow - 2000 a year.

COC = 10%

Assuming every year there is ZERO appreciation:

Year 1 Principal Pay Down - 1,000

Question - How do I calculate the principal pay down as part of the overall return?

Do I add principal pay down(1K) + CF(2K) and divide by initial capital ( 20K) to get a ROI?

If yes,

is it correct for me to take the total principal pay down the subsequent years and apply the same formula. Example - if by year 5 there is 10K in total principal pay down and still 2k in cash flow. add them together (12K) and divide by initial same capital (20K)? 

Thanks All!