They will then put it on the market at the "market cap" say 7%, in reality inflating the purchase price by 10%.  

Inflation alone has wiped out any real value growth.

The stock market on the other hand provides an infinite pool to buy, no limits, completely passive   And your illiquid 198k equity gain is subject to the same inflation effects as my liquid 300k stock gain.

The fact that the clients appraisal doesn't match your selling price is a huge red flag that the price is inflated.

Much of it depends on the market you're in, but let's assume the local economy is growing equal to the population, and wage rates are equal inflation.  

There is simply no margin if you pay 10% of rent to PM monthly plus the inflated maintenance and turnover costs. 

Also we have that wonderful thing called inflation, at 8.5% you'd be nuts to use today's cash to pay of future debt!

These 30-year loans on turnkey rentals will probably look REALLY good going forward based on where things are today and where they could be heading (inflation, rising rates, etc.).  

But I also don't want my assets to be destroyed in value because of inflation.

HOT INFLATION.