When it falls + you buy at the peak thus achieving miniscule yields of 3% with gearing of 80-90%, your IRR easily blows out to some negative 20% per year over a 5-6 year period. Can you afford to lose 20% of what you invested every year? By 5 years your equity is wiped out...
ie buying a $600k place with $120k place your $120k is wiped out pretty quickly.
Most people prop up their returns by "paying down" their mortgage - in affect they're chucking in even more equity into an underperforming asset class to stave off the negative impact gearing has when prices fall and your rents are less than your interest (or in finance talk, your cost of debt > return on asset). What a noob thing to do... it is completely self-delusional and when 6 years later the asset finally achieves some 15% growth in one year they feel it's some great investment, but disregarded all the lost interest and the lower value of the assset, as well as the opportunity cost of just putting it into a 24-month term deposit at 8% IRR pa.
I guess I'm pretty much in agreement with what Intrinsic_Value and AusProp are saying, but just explaining it more numerically. Too bad most people like to delude themselves.