Why will a private investor accept a low return on their all cash investment?

[Robert Walmsley]

I am a Realtor® and have a property with about $75K in equity. I want to purchase a second investment property but do not want to tap my equity. I have a few friends/colleagues whom I can approach for private funding. Here is my question/example using easy numbers (not a real scenario):

Buy $100,000 property cash that rents for $1000 per month grossing $12,000 per year which is a 12% ROI.

or

If I put 20% ($20K) down and finance the rest the return jumps to 60% ROI (just based on actual cash in.)

So I understand why it is beneficial to me to leverage myself with financing but why is someone going to lend me $100,000 of their cash at maybe a 5% or 6% when they understand this same scenario?