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How to become an architect developer

Jan 25 '14 57 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.         

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.

blue_diamond
Oct 7, 14 7:51 pm

pale shelter - You don't need to have your own equity to start developing projects.  On a ~$1m project most investors will want to see "skin in the game" of about $20k.  Your deferred architectural and development fees will more than cover that.  Jonathan Segal teaches architects how to market and pitch to investors which is the hardest part for many of us who have mostly introverted skill sets.  Basically you have to become a salesman and find leads, create a direct mail marketing package, send out 100-200 of the packages, and then make 500+ follow up calls.  It's tedious, but it works.  That is the standard process for sales in many business models. Several of the Woodbury students went straight into developing projects after graduation with no capital, no job, and a ton of student loan debt so you absolutely can pull it off in your situation.

A really good tip from Segal that you can work on now is increasing your total revolving credit limit.  That may come in handy because there is a high chance you will have cost overruns beyond your contingency funds and you will lose credibility with investors if  you go back to them during the project and ask for more money.  Find ways to increase your limits without creating hard inquiries.  I raised my total limit to over $100k by just calling my banks.  I haven't had to use it yet but it gives me peace of mind of mind that is priceless.  

I could go on forever but my primary advice to you is learn the standard methods of marketing and pitching to investors.  If you become good at it you will open up a world of opportunity that will change your life.   

Carrera
Oct 7, 14 8:09 pm

I guess I’ll come back later with more time, have a lot to offer if there is interest.

shuellmi
Oct 8, 14 1:05 pm

I have a ton on interest in this, but between work , a youngster, and taking exams i just don't have any spare time.  Hopefully the exams will at least be done by spring

pale shelter
Oct 8, 14 5:31 pm

blue_diamond: good info, thanks.

Between now and when I wrote that last post, I left my architecture job and have been working for a developer the past several weeks. Scary at first, but the constant action, decision making and strategy is enjoyable and challenging. I learned a shit ton just on my first day alone. My boss/owner is too busy with owning commercial buildings, land development, a construction company and mgmt company. ..and so I act as his development manager in doing a new 5+ story 200 unit multi-family building. It's great experience. Carrera knows a thing or two about being an architect + contractor + developer + more. Whether my boss allows me to do smaller scale projects where he may invest/partner with me some day, or if I follow your info/guidelines above... I look forward to being the Owner at some point down the road.

midlander
Oct 9, 14 1:57 am

Carrera - very much interested to hear more from you on this. You tell some good stories.

Good luck pale shelter!

Carrera
Oct 9, 14 10:47 am

I’m here, thanks for the invite – not feeling well enough to read everything and get too deep – big subject. I have written things elsewhere so for now let me just touch on the one biggest myth surrounding this subject – and if you want you can ask me specific questions that will be easier for me to delve into.

First a point of reference – I’m retired now but when I started out I created what I called the “Quintuple Bubble” -  Architecture – Construction (CM) – Development – Real Estate – Property Management. Some jobs were just “Bubble” others “Double Bubbles” even got many that turned into “Quintuple Bubbles” – always different but point being that I got paid multiple times for just one thing! The problem with this thing we do is that it’s so damn hard to just get a project – that’s really the hardest part and if you can figure out how to add multipliers to the projects you do get it will make you more successful and make it all easier. For me it wasn’t so much about money but control.

(Development) - “You Need Money To Get Started Myth” – That’s just not true, all I invested to get started was $300. One day I went to get a burger at a new McDonalds that just went up across from a gas station in farm land just on the edge of the city. On my way back to the office I spotted a tiny “For Sale” sign (kind you get in a hardware store) sitting on the edge of a huge corn field (could hardly see it) just ¼ mile away from the McDonalds. I got the number and made a call with all the obvious questions. In short I got this acreage with a land contract with nothing down with small payments. I did not know what to do with it and I wasn’t “big” enough to go to a bank with anything so I bought a plywood sign (4X8) but said the same “For Sale” with my number. Just went back to my normal work and almost every day I got a call with all the obvious questions. BUT, I always had questions of my own “What are you dreaming about?”, “Do you have financing?”……just weeded through the calls then one day a car dealer called wanting to build new. In short again all he wanted was to buy the land but by the time we were done I had a “Triple Bubble”. He agreed to let me develop it and rent it to him - using the 10 year lease he signed I took that to the bank and based on that as equity I developed it for him – Designed it, Built it & Rented it to him at a 16% return and in 10 years he bought it from me at full price plus appreciation – you would think I got paid 3 times for that but when you factor in the end sale it actually works out to be 10 times!! All with a $300. sign. Do you have $300.?

Sorry to be so long.

shuellmi
Oct 9, 14 1:00 pm

Jeff Svitak is an architect / developer!

Jeff Svitak might not be an "architect" as far as licensing law and just a building designer. I checked CAB and don't see his name come up in the query.

If you are licensed in California then you are on that database on their site. Is he licensed is a good question.

But designer-developer is just as accurate and even designer-developer-builder.

midlander
Oct 9, 14 10:42 pm

Carrera - how familiar were you with construction management and negotiating with contractors when you went into this? Any suggestions how to minimize risks on this? I feel like my experience in that is lacking and managing the contractors would be a real weakness for me if I get into this.

Hope you're feeling better soon.

Carrera
Oct 10, 14 12:27 am

Midlander, just starting out I was a draftsmen for a number of years and needed two things – I needed more money for my new young family and needed to learn how to build things. I had a construction superintendent say to me – “you architects don’t know anything about building….” and that is all I needed to piss-me-off enough to want no one to ever say that to me again. I answered an ad by a contractor/developer looking for an “architect”. I wasn’t licensed but I went and sold myself into the job and learned from that job how to build and develop things. It wasn’t my intention to stay forever but to return to straight architecture but once I learned how-to-do-it there was no turning back. You need to go into the “business” to learn it if just for a little while, it won’t take long. Just build one thing and that’s it. Most contractors are really nothing special and can’t hold a candle to all you can do….just slide over for a while…then slide back. Even if you don’t become a developer you will be a better architect.

It really isn’t complicated; I have offered others to set them up as contractors. The offer stands to you and any architect that wants me to do it. I took over the construction company I worked for and changed it to CM, so I know CM forwards and backwards and recommend it as an alternative to hard-dollar construction. CM was created by architects and I get so pissed by those that think that it can only be used on multi-million dollar projects. I used it on car washes and houses and it works beautifully – owners love the idea of full disclosure.

All: Don’t be afraid to add services to your palette, it will pay off in spades, not just in money.

I'd look forward to doing this. 

gwharton
Oct 13, 14 7:57 pm

"Most contractors are really nothing special and can’t hold a candle to all you can do"

This is profoundly true.

Carrera
Oct 13, 14 10:20 pm

Following gwharton – was on the road tonight listening to a program on WJR – Detroit, about franchising. Amazing how you can be just anybody and make millions in this country. If only about 50% of Americans graduate from college, shouldn’t it be those 50% that are the millionaires? It seems in reverse. 

midlander
Oct 14, 14 2:04 am

According to this 35% of billionaires didn't graduate from college. I suppose the numbers for millionaires might be even higher. I think people who know for certain what to do at 18 are better set than most of us and get a real head start.

shuellmi
Oct 14, 14 3:18 pm

i just found a very interesting website which says a lot of what carrera has been saying here (business of architecture) which has a treasure trove of relevant videos for wannabe arch/developers.  

Once I have some free time I'll be selling my wife on this hard

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