There is money in real estate – no question – but where is there the most money?  Unlike many business models which have a manufacturer/wholesale/retailer vertical path, real estate generally has only one path and that’s direct to the buyer.

So where a manufacturer has to sell to a wholesaler at a price where the manufacturer makes a margin when selling to the retailer, who also needs to make a profit…. The wholesale real estate business takes all the money from selling direct to the end buyer.

Whenever someone says they have made money in real estate, serious money, I’m listening to find out whether they bought and developed a totally new subdivision, built an apartment block, or renovated an old warehouse or the like into apartments.

Of course, being in the wholesale end of the market can be a lot more dangerous than being in the retail end.  Projects tend to take a lot longer and if the market turns, the developer may not be able to back out of a project that has no hope of being profitable when it’s time to start selling the units.  The ank may in fact halt the project, demanding more security if a drop in land/property prices leaves the bank with less security.

Moving a few retail real estate properties is one thing – selling 50 or more is another.  Remember my words on scarcity?  With a large development unless it’s in a super prime position -well – there just is no scarcity.

If you are thinking of making the transition from retail real estate investor to wholesale, real estate developer do so with your eyes wide open.

You can make money from buying and selling at the retail end of the market.  Many people do. But the serious money to be made in real estate is from the direct vertical of manufacturer to Retailer.