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Startup residential architecture practice - What to consider?

mega_pointe

I'm contemplating what it would take to start a residential architecture practice in Fort Wayne, IN where I currently live and work. The market for new housing here is dominated by builders in the suburban areas while older homes near the city's core are highly sought after and are harder to come by everyday. As the city becomes a more attractive place to live, I expect people will be looking for more opportunities to live near the city which should provide opportunity for a startup residential architecture firm. Currently, there are a zero firms here that practice single family architecture as their core market.

100+ miles away in Indianapolis there appears to be a thriving market for architect-designed single family homes. AIA Indy is successful in promoting this market through its now annual AIA Indy Home Tour. I imagine if more people in Fort Wayne were to be exposed to architect-designed homes as they are in Indy they would be more apt to consider hiring an architect for their future homes. 

I would really like to know what it takes to begin a residential architecture practice, specifically how some of you got your first clients and how you marketed yourself in your firms infancy. Additionally, I'm curious if Fort Wayne's famously inexpensive housing market would make it more of a challenge to be a successful or profitable firm. A home for sale in Fort Wayne today would go for 2-3 times as much if it were located in Indianapolis. 

Note, I'm in my first 5 years of practice and recognize there are a significant number of other factors that would dictate the success of said practice. Right now, this is purely hypothetical and I would just appreciate the insight of Archinect contributors. Thanks in advance!

 
Oct 22, 17 9:51 pm
randomised

You just gave every architect in your neck of the woods a great idea and a heads up, don't think there'll be zero firms practising single family architecture there for much longer...

Oct 23, 17 1:46 am
Tinbeary There there

Clearly you've never visited Indiana. I don't think there will be a rush to practice single family in its small cities anytime soon or ever. There is a reason no one is doing it already.

Tinbeary There there

I looked up Fort Wayne. Bigger than I pictured. Seems it could support a few residential designers....

randomised

You're right, I never wandered too far out of NYC when I lived there. I just thought it was funny that people would do their very specific elevator pitch here online.

mega_pointe

I'm not too worried about anyone else starting a firm specifically for single family architecture. For one, I don't think I'm the smartest individual in this part of Indiana that this was somehow an original idea. Second, I would honestly welcome the idea of someone else diving into this market. It would do some of the leg work to prove to people it could be a viable market here and I think it would raise the bar for design here in NE Indiana.

randomised

Well, before you know it there'll be a SOM Fort Wayne office ;)

clients

Oct 23, 17 4:05 am
mega_pointe

Who knew!? :)

Tinbeary There there

I would get in with the builders and realtors as they are often the ones to hear from clients on renovations and additions first. 

Oct 23, 17 7:42 am
mega_pointe

Making friends with realtors sounds like a great start and something I've heard a lot.

( • Y • )

Most firms start with a sizable commission, at least large enough to pay the freight for a period of time. Often achieved by taking a client out the back door of the firm where one works.

Oct 23, 17 9:33 am
mega_pointe

That would make for an interesting way leave a firm. Not sure I'd want to go that route. I imagine there are enough requests for single family architecture coming into most firms in town that are getting turned down because no one is doing them unless they are multi-million dollar homes.

mega_pointe

Can anyone speak to whether there's a correlation between the success/profitability of a residential architecture practice and the cost of housing and/or living? I don't know if construction cost is significantly different, but currently you can find a 4 bed / 2 bath / 2800sf house for just over $100k in a great part of town. Unless housing stock becomes harder and harder to come by, I wonder if people would be willing to spend 200-300k on a similarly (or smaller) sized home. I'm thinking people would need to be willing to spend at least that much in order to charge 7-10% and make enough to not just skim by. Lots of holes to punch in these points I bet.

Oct 23, 17 10:05 am
jla-x

Yes of course. The cost of housing indicates the income of its inhabitants. It's not the arch fees that are the main obstacle in building a new home, it's the financing for a construction loan, the land costs, etc. Imo you should focus on remodels and/or investing and being your own client.

mega_pointe

Great point, jla-x. I see the cost of housing/land going up by quite a bit over the next 5-10 years as the downtown significantly redevelops its riverfront and some of the brownfields at the edge of downtown. I would love to be in a position to be my own client, but obviously that would require significant start-up capital. Maybe work my way towards that?

jla-x

In my area, because of the disproportionate cost of raw land to lots with existing homes, people have been buying houses, tearing almost everything down but a wall or two, and building what in the end looks like a new home. Counterintuitive, but apparently cheaper and faster then building new. One of the biggest hurdles is where the person will live when the new house is being built as most people will have to sell their existing home before being approved for a new one...and most people looking into building a home are not first time home buyers. In the 200-300k market buyers want a product, not a process.

Tinbeary There there

Of course it matters. I was talking to a market researcher a few weeks ago and they said LA is the city with the highest % of homeowners who hire architects and that was 22%. Fort Wayne is probably significantly less. Anyways, yes, there is data to mine. And I agree to stick to renovations and additions. The homes in the city center are probably best candidates for that. There is probably a market to buy a home for cheap, update, pop the top, finish the basement, add a sunroom, etc. Can you charge enough to make it worth it? Become the general as well and maybe you can. If homes are as cheap as $100k, you should save up for a down payment and buy a house, no better way to do it if you can. $100k doesn't buy anything where I live. Maybe a shack with no plumbing on a dirt road. Maybe. All real estate is local. Reminds me, become the realtor too and take that fee.

Marry a lawyer. (I always say that)

Oct 23, 17 6:18 pm
thatsthat

If you are aiming to do renovations, it may be good to check in your area for non-profits - maybe ones that help with historic properties or revitalizing neighborhoods in the city - that may be willing to recommend you to potential clients. At least if you plug yourself into that network, assuming it exists in your area, it may be good to make some contacts for potential future work. 

Oct 23, 17 9:51 pm
whistler

one good client!

Oct 27, 17 1:22 pm

Client(s), those planning review times are long-ish. A girl needs to eat.

mantaray
Lots of great advice in this thread. One thing I'd like to add is that in some ways, a low cost of local housing can work against you. This is because pretty quickly as an SFR architect you find that your clients are counting in resale value to their cost/benefit calculations. Many folks are looking at a 5-10 year ROI and in a cheap-as-hell market, the numbers just don't add up. If you get a client who is dead set on renovating for their "forever home", or for their heirs (assuming they know their kids are going to want to stick around in Podunk, Indiana) you're good to go. Those people DO exist--they just want to renovate so their home is exactly what they want, and they'll live in it for 20 years so they don't care that they are effectively pricing themselves out of the resale market during all of that time--but there may not be enough of those kinds of clients to pay the bills full time. The reality is, in a cheap market, many people who WOULD want extensive renovations (bc their house just isn't working for them in whatever way) will simply buy a whole different house that they like better, bc it is cheaper to do that than to renovate. Large renovations or new-builds in a cheap housing market can effectively leave folks underwater on their mortgage for an extensive amount of years, which for many people is not realistic or desirable.

So more likely you get your typical kitchen-and-bath upgrade folks, and the percentage arch fee on those jobs is honestly so low that unless you're moonlighting you will lose money.

The other trouble with a small market where no one ever works with an architect is that you have to do a LOT of client education. Generally folks in that kind of a place will turn to a builder before an arch because an architect sounds like something for rich people only. They don't necessarily believe architects add value--and they are used to trusting the builder first and foremost. So you end up having to go to a lot of trouble to effectuate good design.

That said, it can be very fulfilling, if you are open to doing this. I personally love being a local neighborhood architect. However, even in a big city I'm still just managing to keep the moonlighting steady--it will be many more years yet before I can actually sustain myself at it.
Oct 29, 17 10:37 pm
3tk

Great comments from mantaray.

You'll need some initial clients that pay enough to keep you afloat - advice I got was to have enough cash on hand to be able to get by for 2 years until you begin to be able to get a feel for running a business and turn a profit.  A great client or two, either through friends & family or connections from an old job (without competing) are good.  Most likely in a small market you will need to be able to handle work outside SFR as SFR in a low market like that will be hard to drive enough fees (unless there are higher end homes here and there or you have an efficient model that gets good turnaround of work).

I'd say keep an eye out to see if there are any architect backed work in the market.  Other options are to work with builders to allow them to provide value added services or go design-build, both get a bit reliant on the market for my taste, but the risk may be worth it.

Oct 30, 17 3:50 pm
mantaray
Also I forgot to mention that banks don't often offer construction loan financing for a project whose assessed value will be underwater. Therefore, if the highest prices houses in your area sell for say $500k, and your client bought a small fixer upper for $300k, then a bank would only finance them for a $200k renovation/addition. This include architectural fees, so the most you'll see out of that project is maybe $20k in fees--on a 2-yr project. Minus project overhead/taxes, you would need at least 5 of those to replace even an entry level arch salary.
Oct 30, 17 4:57 pm
mantaray
That's part of the reason it (unfortunately) helps to work in a market with significant wealth concentration. I have 4 large SFR projects right now and all are independently funded (i.e. super wealthy folks who can drop $2mil without needing a bank to write a check) or developer spec (as 3tk noted).
Oct 30, 17 5:00 pm
JLC-1

amen

thisisnotmyname

Mantaray is right,  The individuals willing and able to pay an architects fee for a full-custom design generally have a lot of money and an appreciation for deluxe materials and fancy detailing.  

Otherwise, there's lots of drafters working out of their homes who will draw up rudimentary "house plans" for 20 cents a square foot.  The design is just stick-built banality, but its good enough for many.  There's also the free design services low-budget clients can get at kitchen and bath stores.


Oct 31, 17 11:57 am

I don't have a set per square foot price. I don't know how that can even be a thing. There are so many revisions in residential typically. How can anyone give a per sf price? Seems insane way to go.

jla-x

And to narrow the demographics even further, most of the rich people want super sized banality.

This describes in part the business model of the Kardashians.

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