Using Money to Buy/Rent Out or Lend out as Private Lender

[THU NGUYEN]

Hi BP members,

I need help analyzing the follow:

In Houston Rental market (suburban), most will follow the 1%...so here is my calculation for getting a rental house that can rent out for $1500/month, at $150K

	Monthly
Rent	1,500	18,000
50% rule (tax, insurance, HOA, Maint 10%, Vacancy 8%)	(750)	(9,000)
Mortgage	(539)	(6,468)
Cash Flow	211	2,532
Price	150,000
20% downpayment	30,000
Closing Cost	4,000
Total Cash out	34,000
Cash on Cash Return	7.4%
Cap Rate	2%

If I get COC return at 7.4%, why should I or any other investors do it? If you lend your money out to as private lender or even on Realtyshare.com; RealtyMogul.com you see that the return can be as high as 13% or as low as 9%.

Am I thinking straight?  Why should I buy and hold a rental property for 7% vs lending out cash at higher rate?

Thank you in advance for your help.