Becoming a private lender question

[K S.]

I lent money to a flipper in San Diego who claimed bankruptcy and fled to Canada. I then realized the lender made over a million dollars when he foreclosed on his property. I was wiped out as second lien holder which got me to thinking about legitimetly becoming a private lender.

My question is if I already make 7.5% off a few of my 250k condos, then how does private lenders (not hard money lenders) make money off charging 7-8% returns when they can just purchase condos in cash for the same CAP rate?