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How to become an architect developer

Jan 25 '14 35 Last Comment
mojada
Jan 25, 14 12:35 pm

Hi everyone,

I've read this forum a lot but this is my first post so I just wanted to start off by saying thanks for all of the knowledge you have shared on here.  

I am a young architect considering the architect developer path just trying to soak up any insight I can find.  I am really curious why there aren't more architect developers - it seems like an obvious career pivot that can empower an architect to fully realize their vision of improving the built environment while also making a lot more money.  I have generated estimated pro formas for several buildings where I was able to get cost data and I am routinely seeing profit margins of 25% and greater which is obviously a lot of money.  Also the architect developer projects tend to be far more creative because you don't have some conservative developer with poor taste calling the shots.  So can anyone speak to why more architects aren't doing this?

Also I am looking for any resources that you guys might know of.  I am aware of Jonathan Segal and John Portman but outside of that it seems difficult to find knowledge besides going a masters degree or working for a developer.  Please share whatever you know!!

If anyone else is looking to take this path I'd love to connect and talk as well.  

Thanks,
James           

 

citizen
Jan 25, 14 12:59 pm

Many threads on this subject are available via the search function...

You are on the right track. This is one of the best way for an architect to make some serious money and realize the original dream you had when you got into architecture.

 

Gang Chen, Author, AIA, LEED AP BD+C

Saint in the City
Jan 26, 14 9:21 am

mojada

I love this idea.  

Citizen's post would suggest that the topic has been discussed at length on the forum -- in fact it has not.

 I'm similarly interested in the idea, and have searched but come up dry on useful info here.  I like archinect, but on the subject of architect as developer, you'l learn much more elsewhere.  Little real info.  Everyone on here has likely worked with/for a developer, but that has little to do with what you are looking for.

Careful with the pro formas and projected profits. That said, I firmly believe that the profit potential far outpaces that of a conventional architect.  

Shoot me a PM.

backbay
Jan 26, 14 10:23 am

the topic has been addressed on archinect a lot, but its usually just a bunch of people saying they've never done it but want to, with a couple mba's that have done it chiming in.   i guess i'll be one of them since this is a career path i'm actually interested in myself, and i did a business degree so i have a little knowledge of finance and accounting.  in addition i've also bought and read a few textbooks on the subject of development.  its seriously not as easy as everyone here makes it seem like it is, and is certainly not the weekend hobby or side business that people confuse with owning some rental properties.  the more i learn the more i realize i don't know about it.

granted i have no practical experience, but the feeling i get is that just like architecture, you'd really have to work in it for a couple years if you really want to know what you're doing and how the industry actually operates.  i also couldn't imagine doing it without at least a slightly-more-than-vague idea of how capital markets and investments work.  it seems like if you're doing pro formas then you probably know something about business, but for everyone else i feel like taking some finance classes mandatory before you even start thinking about it.

finance people are totally different than architects, and in order to succeed you'd probably have to stop thinking like an architect and do straight out ugly development just like everyone else until you've figured out a way to combine the two skill bases.  it would be naive to think that you could immediately and successfully blend the two professions when you don't have any experience or education in one.

my recommendation would be to stop looking for architect/developers as a place to start, and start looking at real estate development in general.  no one is just going to sit down and have coffee with you and and transfer all their real estate knowledge like their telling you some type of password.  you might get the impression that its a really simple field that anyone can do since some of the developers you meet probably seem a little stupid, but you're also following the same train of thought that your clients/contractors/relatives have of "well any moron can design a house; its not that hard."

if you're serious, pick up a text book and learn it.  don't go for those "so you want to develop property" books you find at barnes and noble.  get a 900 lb. college textbook and read it cover to cover.  when you're done with that, go get another.  if you're not sure which ones to get, go online and find master of real estate development programs that post their syllabi online, and read those books (I know that MIT has all of them posted).  these will give you a general framework to teach yourself in.  do problems, make homework for yourself, and get a full understanding of what you're actually doing.  if you don't understand the math behind it, or where real estate fits into all the other financial markets, then you have absolutely no business trying to develop unless you want to take on an incredibly large amount of risk due to lack of information, in a field that's already based on risk.

i myself feel like i need a little more experience in architecture before i (most likely) leave it for a couple years to get some experience in real estate development.  at that point i could probably figure out if the whole architect/developer thing is feasible.  for you, i'm not sure how easy it is to get a job in it without some kind of finance/business related degree, but i have one.  but then again i'm also one of those people that doesn't like putting myself into situations where i don't have enough information to make educated decisions (no flying by the seat of my pants).  but anyway, that's what i'm doing.  hope this helps.

Miles JaffeMiles Jaffe
Jan 26, 14 10:55 am

All developers are architects. They determine the program, scope, budget and then hire some poor licensed slob to crank it out for them. If you want to be a developer all you need is cash and no qualms about cutting throats. The public is beyond clueless and price determines everything.

Ethics are detrimental to the business model.

quizzical
Jan 26, 14 11:45 am

Actually, Citizen is correct - there have been quite a few threads here that deal, directly or indirectly, with the topic of  "architect as developer" - here are a few links you may find useful:

Anyone made a transition to work for a real estate developer?
http://archinect.com/forum/thread/51046546/anyone-made-a-transition-to-work-for-a-real-estate-developer

Architect and Developer
http://archinect.com/forum/thread/81057437/architect-and-developer

Real estate/Developers & Architect
http://archinect.com/forum/thread/63722278/real-estate-developers-architect

Architect + Developer: A Partnership
http://archinect.com/forum/thread/53912903/architect-developer-a-partnership 

Real estate investment/developing experience
http://archinect.com/forum/thread/47702561/real-estate-investment-developing-experience

How is working for a developer?
http://archinect.com/forum/thread/95154/how-is-working-for-a-developer

Real Estate Developerment
http://archinect.com/forum/thread/81214/real-estate-developerment 

any architects that have gone into real estate?
http://archinect.com/forum/thread/71431/any-architects-that-have-gone-into-real-estate
 
What other models for architectural practice might be workable?
http://archinect.com/forum/thread/86146202/what-other-models-for-architectural-practice-might-be-workable

ark1t3kt
Jan 26, 14 12:10 pm

There is a great interview you can check out with Jonothan Segal at the Business of Architecture website. I would post a link, but my tablet is acting up.

ark1t3kt
Jan 26, 14 12:19 pm
Saint in the City
Jan 26, 14 12:42 pm

quizzical -- don't think so.  As I said, I already did the search, read them.  I appreciate your posting the links, but there is little info in them.  

Saint in the City
Jan 26, 14 12:47 pm

Miles, I enjoy the persistence of your pessimism.

But, again, as I said, most architects have worked for developers, but that's it.  Have you ever personally performed as both architect and developer on a project?

quizzical
Jan 26, 14 1:00 pm

Saint - with respect, I didn't post them for you - I posted them for the OP. If you don't find the links useful, fine - ignore them. That doesn't mean a newby to this topic won't find some useful background info there.

Saint in the City
Jan 26, 14 2:54 pm

Anything's possible.  But, like what?

Miles JaffeMiles Jaffe
Jan 26, 14 3:03 pm

Saint:

The power of accurate observation is commonly called cynicism by those who have not got it.

blue_diamond
Jan 26, 14 3:43 pm

I've done two projects as an architect developer.  I sold the first one a year ago and made $220k profit after taxes and then I just sold the second one recently for a $275k profit.  Starting out it was very stressful because I was inexperienced and constantly worried about making a mistake and mistakes are very costly in this game.  But I had more confidence the second time around and didn't lose any sleep this time.  I highly recommend this career path to every architect - it is rewarding in every way imaginable.  You will feel empowered and be so much more motivated because of the greatly increased financial incentive.  It will change your life forever. 

This is the golden age of real estate development because we are at the beginning of a long term up trend and costs are still very low across the board.  I would recommend starting immediately before things start to heat up again and interest rates rise along with labor costs.  Not to mention it is easier than ever to get investor funds and crowdfunding is really taking off as well.         

I just followed the Jonathan Segal model from www.architectasdeveloper.com.  It has everything you need to get started including contracts and pro formas from his projects as well as 8 videos where he explains the entire process.  He charges $500 for the materials but I can pass them along to any of you for $75.  Email me at bmag.developer@gmail.com if you are interested.     

backbay
Jan 26, 14 5:19 pm

Those threads only go so far.  BOOKS, damn it.  Read BOOKS.  This applies to every subject you ever wanted to learn about.  Everyone thinks you can learn things online through the bits and pieces of misinformation and opinions that people post about stuff, but if you're more interested in the subject beyond "hearing about it it" and want to actually learn "how to do it", you gotta read!

Saint in the City
Jan 26, 14 5:25 pm

Thanks Miles Bernard Shaw, but first you'll need to say something accurate  ;-)

Saint in the City
Jan 26, 14 5:29 pm

Blue Diamond -- question, because I don't know -- is it legal to sell those materials?  

Saint in the City
Jan 26, 14 8:05 pm

Very.....curious.....about  Blue Diamond's entire post.  Half a mill to the good this year, but needs to sell used course materials at a discount.  

From a "different" archinect member maybe a month ago:

"Are any of you interested in the Jonathan Segal architect as developer seminar?  I'm selling the videos and documents for $75 that I bought for $500 from architectasdeveloper.com.  It's invaluable insight that is unavailable anywhere else."

Quite a coincidence.
 

Atom
Jan 27, 14 12:32 am

Unfortunately the architect developer projects are not turning out to be far more creative. There are now plenty of average and boring projects done by junior architect developers. As has been said in these forums for long enough, and as is the case with most career paths, you just do it. The difference, as has been said here many times, is you must have access to funds. 

Need proof? Have a look at the front page on archinect. Are there far more creative projects done by developer architects? Clearly not. Are you going to stop blaming the clients or did you ask a leading question because you were trying to sell something? 

Development has the potential to generate an income received on a regular basis, with little effort required to maintain it. Almost every architect would develop if they had access to funds. It is not a complex matter, you have money, you make a building.  

wurdan freo
Jan 27, 14 1:59 am

I am going to second what Atom said on the financial side. I have seen it several times. Wanna be a developer, just add money. If you have the funds, you can develop whatever you want. There are other ways to go about it, but it's not complicated. Have a vision. Have funding. Buy the land. Design the Project. Build the project. Lease the project. Sell the Project. 

You minimize the risk by starting small and doing it on your own or working for someone else and learning how to do larger developments. You can read books all day long and educate yourself, gain knowledge, but at the end of the day you have to do it to gain experience. 

That is right, funding is one of the key, the other is location. Experience and expertise is also very important. I have met a guy who spent over 20 million dollars of his own money and bought thousands of acres of land at a very inland location, and have not made a dime from this "great" investment yet.

Find a way to get loan, that is the first step.

If it is done right, architect/developer is a good way to establish stable cash flow to make you financially staple and can really do the things that you want to do.

Gang Chen, Author, AIA, LEED AP BD+C

Saint in the City
Jan 27, 14 9:26 am

Atom -- I think you misread mojada, who in context said:

Also the architect developer projects tend to be far more creative because you don't have some conservative developer with poor taste calling the shots

Meaning, more creative than the typical developer, not more creative than all architects, as I think you took it.

The disadvantage of being an architect/developer is: other developers may not be willing to give you design projects because you are now a competitor for them. That could mean a loss of 50% to 90% of design projects to a typical architect.

Gang Chen, Author, AIA, LEED AP BD+C

wurdan freo
Jan 27, 14 12:37 pm

Gang - I'm not saying there aren't a million mistakes that could be made that would cost you everything. What I am saying is that the business model for development in itself can be very simple. The biggest barrier to entry for most is financing. Couple ways to minimize risk are as I described above.  

Did your guy who spent 20 million have any experience in development or land banking? Just because you have the financing, doesn't mean you can be a successful developer. Mistakes can be costly, thus the recommendation to start small or learn from someone else how bigger developments happen. 

backbay
Jan 27, 14 1:09 pm

okay fine, don't educate yourself on it.

Atom
Jan 28, 14 4:51 pm

Yes, don't, or do more doing than analysing. Not one of these new developer cults is lead by a developer that started with a vast amount of research. They made wood boxes on dirt lots before the internet.  

Who are these junior architect developers? They are largely republi-kids with their parent's money to spend and that is usually a pre-requisite considering next to nobody will back the novices without experience. As soon as they get out of studio they all turn every bit as conservative as any developer. Creativity is not suddenly gifted to you when you make the decisions a developer makes. While we are at it, we should probably clarify the difference between an owner and a developer. Developers are like architects, they get a fee and are not always the owners. Everyone wants to be the client. Most of these creativity tantrums stem from the client not having the funds in a construction draw for embellishment.  

Conservative developers are not inherently what stifles creativity. Some conservative developers consider themselves fans of architecture. I won't read you a list of things which can ruin projects but you know they range from committees through planning.  

Architecture is not a bad background for a developer. Law and finance have also proven successful. I think it could be fun and you could earn money by doing nothing. I won't let stand the insidious notion that my building sucks because/and it was the developer's fault. 

Atom
Jan 28, 14 5:11 pm

They already were creative designers. Becoming developers is not the reason they make interesting buildings but it is why they have a higher earning potential. 

Saint in the City
Jan 28, 14 7:09 pm

Sometimes unrelated ramblings don't end up culminating in a point.

Atom
Jan 28, 14 7:31 pm

Saint in the City  is as a shill.  

blue_diamond
Jan 28, 14 8:21 pm

Guys - Start with the FHA 203k loan.  3.5% down.  ~$800k max. 4 equal draws throughout construction.  This is a rehab loan but there's a loophole where it can be used for new construction if you keep the existing foundation.  Build a multifamily and aim for 30-35% margin, then sell and use the capital for your next project with a conventional construction loan.  Banks are wanting 28% down right now.  Multifamily is selling for above replacement costs in most major metro's right now and most established developers are not interested in 2-4 units because it's too small so this is your niche.  

Saint in the City
Jan 29, 14 12:17 pm

Atom:  Saint in the City  is as a shill.  

For what / whom?

Jackie Smith
Feb 22, 14 11:18 am

Many Architects learn how to develop real estate and land through The REDI Foundation's 6-Month Real Estate Development Mentoring Program. www.redii.org

jyount10
Feb 23, 14 10:22 pm

That "bad taste" that developers have is also known as profit. That lawsuit for the thin demising walls the developer requested is also known as the architect's problem.

pale shelter
Apr 10, 14 12:51 am

Speaking of working for more of a corporate development firm vs. going solo:

I'm in a mid-market city, Minneapolis. We are growing downtown quickly now but there's not the network of large development firms like say Chicago or NYC building high rise condos. In fact, the city is seeing its first couple mid-rise' condo/high-rent buildings in construction right now after probably 8 years. So this is where I want to take my career path - use my past few years working on multi-family housing and jump into a project mgmt role at a dev firm... with intent to taking classes and learn as much as I can on the finance and numbers side....

But what is one to do if there aren't any corporate development companies like Hines in the area? We have one large office - Ryan Companies - that's it - and they're mainly a huge contracting firm.... and after that we have a few 15 person firms...and a bunch of 2-4 person firms.

From what I"m reading here; many of you just say to go out on your own and learn it; read and absorb as much as you can. I"m not interested in flipping houses. And I'm a poor registered architect! lol I can't even afford to buy the average priced home in MSP at $200k.  I want to add density and perhaps rehab brownstones or build new rentals/condos. Others have mentioned going corporate for stability and to learn the ropes ... of which I find the best measure path - A few years at a firm, hopefully make more money than the crap I make now, and down the road begin small on my own. I live/rent in a beautiful 12 unit 1920s brownstone updated 6 years ago and converted into condos. I would love to do projects like this eventually. Any comments - I'd appreciate it.

Maestro
Apr 16, 14 6:11 pm

I think architects who choose this path get caught up in the creative process over the profit motive.  Nothing will happen without capital/equity, no matter how great your design or concept is as a development.  Nothing will happen without financing, either debt or bank financing or private money.  The moment you identify yourself as a developer, the architect becomes a means to an end in that industry.  The few architect/developers are really developers and they are comfortable in those shoes.

Network, meet high net worth people and those with access to capital for investment.  Write a business plan that you can shop around to aquire properties or to invest and rehabilitate.  Assume your architectural fees are part of your work, but don't put too high a dollar value on it since most banks wont finance the fees portion of architect's developments (I know first hand).

don't give up, but either go all in or don't go in at all.

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