Cash Vs. Financing (or financing instead of cash)

Lets say you have 200K to invest in the real estate market in Tracy today. You could use the 200K to buy a good house and get about 1500-1600 rent per month or you could buy 4 good homes with 25% down. Lets explore the two options. Keep in mind,I am not a lender and these payment calculations are rough.

1) Cash option: 200K house, 3K tax yearly, 1600/mo rent (19,200 yearly - 3K taxes)
16,200 yearly cash flow or 8.1% return on 200K investment

2) Financing option:
4 houses at 200K each financed at 25% down, each renting for $1600, each has tax of 3K yearly.

House 1) Rent 1600 (19,200 yearly)
25% down at 200K with 5% interest rate=$863/mo or $10,356 yearly
19200 - 3,000 - 10,356 = $5,844 return on investment yearly.

Multiply that by 4 is $23,376. Now we are looking at a 11.6% yearly return on the same 200K.  So by using the same 200K and financing 4 homes instead of buying one cash you are looking at a total difference of +$7,176 cash flow per year.

Now lets look at appreciation because that's were the real kicker is. Say you plan on selling the homes once they double in price. With the cash option you would get 200K. With the financed option you would get 800K. Clearly financing is the winner.