I like to look at IRR of my property. I don't model in appreciation when making purchases, but it is obviously a property trait that I look at when considering a purchase. Before selling, I'll look at my property and think about the long-term appreciation potential and model out some different appreciation scenarios to see what the return would be (3%, 5%, etc...). I like to buy properties in development areas so I'm hesitant to sell if I think the there is still growth opportunity. One thing you will see, the modeled appreciation will greatly increase your ROE, but you have to remember you could get that same appreciation with your new purchase as well (so it may not really be a benefit).
I'm currently selling a property that I think has more growth potential, but there are other risk factors that are leading me to sell such as upcoming capital expenditures (bought the house new and it's now 7 years old) and the HOA management (potential increase in monthly fees, special assessment, etc...). It's got a 7-8% ROE which isn't enough. I calculate the ROE based on sales proceeds (after taxes and selling costs) as I want to compare current return to the actual amount of cash I will be able to re-invest after the sale. Another item to consider is whether you have identified a place to re-invest the money after you sell. You don't want money sitting around doing nothing.
It's pretty easy to find passive syndicate investments that are 15-20% IRR. When you look at my property above, that investment most likely beats my property, which is why I'm selling. Hope that helps.