Just got back from Jonathan Segal's Architect as Developer seminar and wanted to post some of my thoughts...
First, I think the organizers grossly underestimated the amount of people that would show up. This was evident in the very long food lines, overtaxed (and rude) caterers, and lack of food. For the amount of money I shelled out for this, I was expecting some hot food at the very least - not breakfast pastries, a fruitplate, and cold sandwiches & salad.
The seminar itself wasn't held in the auditorium, but on the second and third floor concourses outside of it. Round tables were placed in front of video monitors and projection screens. I was one of the fortunate few that got a seat right in front of him. Each attendee was given a thick spiral bound book that followed the order of the presentation slides, and contained examples of the contracts, proformas, insurance, and other information that Segal uses. However, this book contained almost zero real content on what exactly these documents do or how to use them.
Segal was a very engaging speaker, but he spoke very quickly and used a lot of developer jargon and business speak that most architects are not familiar with. He lost his audience on numerous occasions and it was difficult to jot down any notes. Granted, there was a ton of content that he had to get through, but afterwards I had to rely on my memory of what he said and not any notes or information in the book...
The seminar billed itself as being "step-by-step" or a "how-to", but it was very lacking in the "why" department. When going though lengthy documents, Segal would say, "Read through these later and you'll understand..."
I enjoyed the seminar and think I learned a bit, but it would've been much more successful if he would've both dumbed it down and slowed down. But for $600, I left feeling a bit disappointed and slightly ripped off. Had I known that this was his first seminar, I would've waited awhile to attend - the seminar has the potential to be fantastic, but requires some heavy tuning...
THANKS! i was hoping someone went to this and would recap. would you say that the information you gained is something that could be "learned" by going to the library or would one need to take this seminar?
do you feel better equiped to do what Segal is doing? any chance of you sharing what content is included in the binder that you feel is important - not posting pdf's - but that architects might not be aware of?
i am wondering if i should take TK's advice and get an MBA, and look into doing what Segal is doing. it won't be cheaper, but i think i might learn more and make better connections.
The seminar really could've benefited from an organizational chart, a flow chart, and a typical project schedule or timeline. Segal's business consists of a bunch of LLC's that are insulated from each other. Would've been nice to have a graphic representation of how each LLC relates to the others and when and where along the process the lawyers, brokers, insurance guys plug in...
Actually mdler his advice was: Never sell. Buy property low, build it yourself (saves money), rent it out forever and structure the income from the rent and your expenses in such a way that your taxes net out to $0.
I went.
First let me say that all things considered I'm glad I went. But I was a bit dissapointed for the price for all the reasons dml955i stated.
Somehow my clock got set an hour behind the night before so I got there as the meeting was about to start so I was relegated to the balcony overlooking the lobby at a seat so far back I couldn't see him, and I dont mean I was too far away, there was no line of sight, the balcony was flat and located directly over him so you had to be seated right at the edge and look straight down to see him. I was quite shocked they would sell so many tickets at that price for a venue that can't support it. For $800, yes, I expected to be able to see him, I wouldn't recognize the man if he walked up and spoke to me.
The caterers were indeed rude and ran out of food. My roast beef wasn't bad though.
The first session was great and was the exact kind of info we need, but it was all to vague and he didn't explain the how or why. I thought he'd get into that in the next few sessions but was disappointed to discuss some of the minutia of the contracts, I agree they are important points, but the contracts are in there for us to review, but a good construction lawyer (which we will need anyway) should be able to help us with that kind of info. I'd like to have spent more time on the specific details of how his business is structured and why.
No you don't need an MBA, or go to a seminar to learn this, he learned all this by just doing it.
One of the things that was quite surprising to me but makes sense is his entire buiness is based on developing and managing rental apartments and then operating on Net 0 taxes. I understand Net 0 in principal, it's the HOW that would be useful to see.
As a general rule: He doesn't do condos. He doesn't do commercial development. He doesn't take on clients. He doesn't like partners. It's a very narrow arrea within which he operates, which isn't bad, but isn't entirely clear from the title "Architect as Developer" that this is the business model that will be presented. The information has limited usefulness for commercial developments and conods. His advice is basically don't do those.
It would have been nice if all the "team" memebers he talked about; Attorney, Broker, Accountant, etc. could have been there and had four seperate small sessions happening simultaneously that we rotated though in smaller groups.
I definately learned a few things and was pleased to learn you're able to make a healthy living off of what I've been planing to do, it was validating, but not eye opening. I appreciate that he spent the time to prepare this and share his secrets with us (most developers are not willing to do the same), I know he had no one to help him and we stand to make a lot of money from this information but the format and content needs some massaging to justify the price.
I don't know if it's asking to much but, I would also have appreciated the contracts and proformas in digital format.
Oh and the NASCAR style sponsor plugs were a bit much for me.
I would say 'with... better seats" psycho got lucky, i was on the second level behind a row of others... if i turned just so in a wonderfully uncomfortable position i could get a glimpse... organization definitely needed work or the cost...
That's one that I've been struggling with for a long time. To get licensed or not to get licensed. I was intrigued to hear him suggest you don't get liscenced. This is also the question he sort of sidestepped that I wished he'd discussed more. Part of his model is bringing "money" to the table as the architect by fronting your services and getting paid at the end. The architects fees that you front is part of your down payment and is what makes it possible (which I've often wondered if it was possible to work this way so I'm excited to see that he's found banks that are). If you're not an Architect can you list that as a cost if you don't hire an architect? I don't think the bank will accept a 15% fee for a "Home Designer". This would mean partnering up with someone which goes against what he's teaching: Being in complete control, having no partners, cutting out all the middlemen.
I don't know how these construction loans work, but I don't think the bank is going to give you several hundered thousand dollars to give to your Architect unless you actually have an Architect. But then again you don't have to be a contractor to be GC on your own project.. but do you get the contractors fees as part of your construction loan if you do it this way?
And then there's the intangible of being an Architect with some credentials, the title Architect might not cary a lot of weight with a bank, but it carry's a lot more than being a "designer" or intern or entrepreneur whatever clever title you can come up with.
yeah i think he may have been skipping over the license issue because he mentioned the that 'AIA made me a Fellow' as dissapointing as it as that skirted the issue it may have been out of respect (but that's just speculating) However, in a way he's right, you don't need it to create a building, technically you just need it to permit your drawings. BTW i'm speaking for residential arch....
He quickly went on further to state that there are ways around it: network with other architects, negotiate a small fee & conditions for them to stamp your creation. thus, justifying the 15% fee...
Personally, I've had offers in the past to do just that but i don't think i'm ready yet to juggle that plus my day job... but the point of this rant is that there are ways around it. Actually, that's basically my day job, boss gives me a client, i design their house periodically checking with boss, i draft the plans, then he stamps 'em...
Well the issue is that (a big) part of his model is based on leveraging the value of the architectural services which is what you as the architect / developer bring to the table. These services you front = capital. This means you can get into the game with little to no money of your own. If your just the developer you don't bring that value and can't use that as capital. That means you need big bucks to get into the game. There were some other advantages that avaliable to you as an architect and those are the things I'd have liked him to spend more time on.
Anyone interested in "architect as developer" scenario should look into David Hovey of Chicago and his very successful design-build firm Optima. He does highrise residential and mixed use projects, and has a strong "design + cost efficiency" philosophy of practice. There is a recent monograph on his firm's work. Hovey started out as an architect at a large Chicago office, branched out as an independent architect/developer of townhouse and lowrise residential projects, and in past ten years has done very large urban projects. He has the best (and most successful) model of a practice were architect controls design, construction, and marketing of his design product. Very impressive operation.
[b]Well the issue is that (a big) part of his model is based on leveraging the value of the architectural services which is what you as the architect / developer bring to the table. These services you front = capital. This means you can get into the game with little to no money of your own. If your just the developer you don't bring that value and can't use that as capital. That means you need big bucks to get into the game. There were some other advantages that avaliable to you as an architect and those are the things I'd have liked him to spend more time on[b]
Is this the case?
Do you banks see your architectural services as being an asset?
c'mon guys, you don't expect him to go over every little detail of what encompasses the last 15 years of his practice in one day do you?
If you are interested in becoming an architect/developer, I highly suggest moving to San Diego and attending Woodbury University's March RED program (masters of architecture in real estate development). It is $30k, and is a 12 month program, taught by not only Jonathan Segal, but also Ted Smith, the father of architecture/development, along with Sebastian Mariscal (who used to work for Jonathan), and Lloyd Russell (AIA young architect of the year in San Diego)....It is a great program and you get one on one time with each of them. They show you step by step how to be your own developer.
Jonathan is a rather egotistical guy, but wouldn't you if you had $20 million in the bank and you were your own financier?
And yes, you should be a registered architect if you want to be a developer. This allows you to use your CD's as equity in your proforma, basically it is as good as money, if you are an architect. Jonathan uses 12% of the construction hard costs to determine what his fee is. His proforma is rather simple, since he has been in the business for so long he knows how approximately how much per square foot the construction will cost. He is his own gc, although he is not a licensed gc, so therefore to the bank he is "owner/builder". He has credentials which allow him to go to the bank and get a loan with no questions. In today's lending market, it would be impossible to get a construction loan (especially if you are to be owner/builder), without a general contractor's license (which is rather easy to obtain, you need 4 years of experience as a foreman and if you went to architecture school, you receive credit for 3 years!)
You must also understand that Jonathan does not want to make it too easy, then there would be architect/developers everywhere and yes, there would be greater architecture, but there would also be more competition.
Jonathan does only multi-family rental projects, because in San Diego, rents increase pretty much every year, and he can refinance after he is finished with construction to obtain the money to pay off his partners...(this is what he did in his beginning years, now he doesn't use partners) He is actually on the verge entering the commercial market, he is to build a 7 story mini high rise in san diego's little italy district.
If you are really interested in being an architect/developer....go find a lot or a home on a lot that is zoned for multi-family. In many cities, there are single family homes on lots that have been upzoned over the years. In san diego, in many neighborhoods all single family lots are actually zoned to allow 2 to 4 units. The easiest way to start is to design and build your own home. If you are owner/builder, you will build for less than market value, then you can refinance to take out equity to finance your next project.
As far as building rentals is concerned, your building is "valued" by the bank with a capitalization rate....that is, you determine your Annual net operating income (the total of rents received minus insurance, vacancy rate, maintenance, etc, and divide it by teh capitalization rate of your city (you can ask your bank what they use)....hopefully, your capitalization value is more than your total development cost (cost of everything inclusive to design and build your development, including permits, fees, hard costs, etc)...this is all determined by your proforma while you are in escrow for the property in question.
I recently attended his mini lecture in KC, which was quite inspiring and encouraged me to give his "method" a whirl.
I will be going to the D.C. lecture and was able to wrangle a deal.
If anyone is interested, i have secured a discount rate if I can get a group together. Pricing is reduced from the current $795 to $595 or as low as $495 if a can get 15.
did anyone record the dc seminar? I tried but my recording came out bad and hard to understand. I would really appreciate any help. I am moving into a project and would like to refresh my memory of the details he discussed. THanks
bri, if anyone responds to you please send me a line. I'm curious about what he said also.
on another note, I wonder how Segal is doing right now. I am starting to hear stories of very well capitalized RE guys in LA starting to sell some of their holdings. Dunno whether bc of cash flow issues or just worried bout future...
Segal was a both a gust lecturer and Juror and the architecture school I attended(New School of Architecture in San Diego) heaven help the fool that didn't have their shit together when he came around - he would take you apart
After I saw this thread necro'd, I went and pulled out my info book and notes from the Oct. 2007 Segal seminar in LA. Most of the advice in there is still good, if rather generic, but the economic environment has completely changed. We're now staring a deflationary depression in the teeth, where in 2007 we were at the roll-over peak of a multi-decade inflationary credit bubble. So the logic of real estate development is necessarily different moving forward. Also much more difficult, though certainly not impossible. The biggest change is one of emphasis: from capital appreciation to operating cash flow as the primary revenue model, and from leverage to equity. Or, in other words, changing back from the speculative model which drove most RE dev during the last sixty-plus years to an investment model.
@gwharton Are you aware of any Architects shifting their focus to that of Developer? After attending that seminar in 2007 were you inspired to consider it? It seems so logical to consider that route but how to make it happen? I am getting mixed signals about the value of these seminars beyond making a few bucks for the presentation team. Full disclosure that I did not attend and was not even aware of it at time. Thanks for your thoughts.
MONEY. If you have it, you might be able to get into the game, if you don't, unless you work for a larger company that does, you cannot. The economic mess we are in will keep any ambitious developers out of the game for sometime (due to lack of credit on both sides - developer's can't get it, home buyers can't get it, makes for a no-one-wins game and why we have only rentals over saturating the market).
I am sure the seminars were great 5 years ago when you could at least debate whether you wanted to get into the game, but now it is just not that easy.
You need money to make money, more so now than ever. More examples of why the rich keep getting richer.
Unless you are Donald Trump and grow up in the real estate business and then inherit a huge amount of money, very few people just wake up in the morning and say "hey, I think I'll go into the r. e. development business today".
I've worked in, and around, the r.e. development busines all of my long career. Most of the succesful developers I have known started working for another developer early in their careers, learned - from the inside - how the process works, demonstrated an aptitude for the work while employed by others, carefully cultivated solid contacts in the investor and banking communities, made - and saved - a good deal of money, and eventually struck out on their own to do their own thing once they were well prepared.
As in all things, it typically takes years of experience, and lots of hard work, to become an overnight success in the real estate business.
dml955i - Thanks for the information about the seminar! I have been toying with the idea of buying his online courses at architectasdeveloper.com, but I think I may hold off on this. It seems like the best idea (if you are an Architect starting from scratch) is to start small and work your way up. I am definetly excited to start building, ie; Architect-Led construction, similar to Peter Gluck's model. I do see the Segal model being a landlord-producing income w/ net 0 taxes, which is a darn good idea! But starting small, like a 4-family, construction costs in this market make it hard to make a decent profit, you would be the owner at least but after all that work then barely braking even on the mortgage! - Thx again.
@cmissle33. Do you think it's about "economy of scale"? A four plex may be a lot of money relatively speaking but still would not have the scale necessary to represent good cash flow.
I began combining development and architectural practices back in 1998, doing suburban office buildings and ultimately moving into apartments, so it wasn't a new thing for me. I went to Segal's seminar to see if I could learn some new stuff from him. I did, but nothing earth-shaking. By that time, I'd divested myself of all my projects anyway, just like he did (so much for "never sell"...HAH!).
Arch/Dev became kind of a fad during '05-'07 (the peak of the RE boom), but now that it turns out development is hard and full of risk, most architects have been scared off. Most of the higher-profile Arch/Dev firms in my neck of the woods turned into spectacular financial failures '08-'09.
Listen to quizzical. The best way to learn RE Dev is to do it, not go to a seminar.
It definitely is an economy of scale. I guess that's what makes it so hard to get into the business. I think a good approach for an Architect now would be to start working as the GC on a small project then once experince and connections are made in the construction process (and capital is made) then moving in to the realm of developer seems more realistic. I am actually starting a residence soon (on the side) and will be the GC. It's kind of funny actually, a lot of our clients are developers and GC's and we usually are performing half their duties during construction (without the compensation)! I think they are trying to keep a low overhead and passing these duties off on to us..but the alternate is no work at all..
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 will change your approach to professional practice and empower your career. Email me at onyx.archinect@gmail.com if interested.
recap of Architect as Developer seminar...
Just got back from Jonathan Segal's Architect as Developer seminar and wanted to post some of my thoughts...
First, I think the organizers grossly underestimated the amount of people that would show up. This was evident in the very long food lines, overtaxed (and rude) caterers, and lack of food. For the amount of money I shelled out for this, I was expecting some hot food at the very least - not breakfast pastries, a fruitplate, and cold sandwiches & salad.
The seminar itself wasn't held in the auditorium, but on the second and third floor concourses outside of it. Round tables were placed in front of video monitors and projection screens. I was one of the fortunate few that got a seat right in front of him. Each attendee was given a thick spiral bound book that followed the order of the presentation slides, and contained examples of the contracts, proformas, insurance, and other information that Segal uses. However, this book contained almost zero real content on what exactly these documents do or how to use them.
Segal was a very engaging speaker, but he spoke very quickly and used a lot of developer jargon and business speak that most architects are not familiar with. He lost his audience on numerous occasions and it was difficult to jot down any notes. Granted, there was a ton of content that he had to get through, but afterwards I had to rely on my memory of what he said and not any notes or information in the book...
The seminar billed itself as being "step-by-step" or a "how-to", but it was very lacking in the "why" department. When going though lengthy documents, Segal would say, "Read through these later and you'll understand..."
I enjoyed the seminar and think I learned a bit, but it would've been much more successful if he would've both dumbed it down and slowed down. But for $600, I left feeling a bit disappointed and slightly ripped off. Had I known that this was his first seminar, I would've waited awhile to attend - the seminar has the potential to be fantastic, but requires some heavy tuning...
THANKS! i was hoping someone went to this and would recap. would you say that the information you gained is something that could be "learned" by going to the library or would one need to take this seminar?
do you feel better equiped to do what Segal is doing? any chance of you sharing what content is included in the binder that you feel is important - not posting pdf's - but that architects might not be aware of?
i am wondering if i should take TK's advice and get an MBA, and look into doing what Segal is doing. it won't be cheaper, but i think i might learn more and make better connections.
The seminar really could've benefited from an organizational chart, a flow chart, and a typical project schedule or timeline. Segal's business consists of a bunch of LLC's that are insulated from each other. Would've been nice to have a graphic representation of how each LLC relates to the others and when and where along the process the lawyers, brokers, insurance guys plug in...
you do not need an mba to do this shit.
vado's right about the MBA, but it sure helps to give the lenders and your investment partners some confidence.
most people with money don't lend millions of dollars on a wing and a prayer (all sub-prime evidence to the contrary).
buy low, sell high
Actually mdler his advice was: Never sell. Buy property low, build it yourself (saves money), rent it out forever and structure the income from the rent and your expenses in such a way that your taxes net out to $0.
I went.
First let me say that all things considered I'm glad I went. But I was a bit dissapointed for the price for all the reasons dml955i stated.
Somehow my clock got set an hour behind the night before so I got there as the meeting was about to start so I was relegated to the balcony overlooking the lobby at a seat so far back I couldn't see him, and I dont mean I was too far away, there was no line of sight, the balcony was flat and located directly over him so you had to be seated right at the edge and look straight down to see him. I was quite shocked they would sell so many tickets at that price for a venue that can't support it. For $800, yes, I expected to be able to see him, I wouldn't recognize the man if he walked up and spoke to me.
The caterers were indeed rude and ran out of food. My roast beef wasn't bad though.
The first session was great and was the exact kind of info we need, but it was all to vague and he didn't explain the how or why. I thought he'd get into that in the next few sessions but was disappointed to discuss some of the minutia of the contracts, I agree they are important points, but the contracts are in there for us to review, but a good construction lawyer (which we will need anyway) should be able to help us with that kind of info. I'd like to have spent more time on the specific details of how his business is structured and why.
No you don't need an MBA, or go to a seminar to learn this, he learned all this by just doing it.
One of the things that was quite surprising to me but makes sense is his entire buiness is based on developing and managing rental apartments and then operating on Net 0 taxes. I understand Net 0 in principal, it's the HOW that would be useful to see.
As a general rule: He doesn't do condos. He doesn't do commercial development. He doesn't take on clients. He doesn't like partners. It's a very narrow arrea within which he operates, which isn't bad, but isn't entirely clear from the title "Architect as Developer" that this is the business model that will be presented. The information has limited usefulness for commercial developments and conods. His advice is basically don't do those.
It would have been nice if all the "team" memebers he talked about; Attorney, Broker, Accountant, etc. could have been there and had four seperate small sessions happening simultaneously that we rotated though in smaller groups.
I definately learned a few things and was pleased to learn you're able to make a healthy living off of what I've been planing to do, it was validating, but not eye opening. I appreciate that he spent the time to prepare this and share his secrets with us (most developers are not willing to do the same), I know he had no one to help him and we stand to make a lot of money from this information but the format and content needs some massaging to justify the price.
I don't know if it's asking to much but, I would also have appreciated the contracts and proformas in digital format.
Oh and the NASCAR style sponsor plugs were a bit much for me.
Sounds like the same presentation from AIA convention last year, just with more instructions to read this or that and better seats.
he actually sold all of his property which is how he became filthy rich...
it sounds like the jist of his presentation was this - charge $800 for a $2 sandwitch
I would say 'with... better seats" psycho got lucky, i was on the second level behind a row of others... if i turned just so in a wonderfully uncomfortable position i could get a glimpse... organization definitely needed work or the cost...
oops i meant 'dml' got lucky...
He also does NOT recommend that future architects get licensed. Too much liability.
tsquared
Were you with the texas peeps?
losdogedog
That's one that I've been struggling with for a long time. To get licensed or not to get licensed. I was intrigued to hear him suggest you don't get liscenced. This is also the question he sort of sidestepped that I wished he'd discussed more. Part of his model is bringing "money" to the table as the architect by fronting your services and getting paid at the end. The architects fees that you front is part of your down payment and is what makes it possible (which I've often wondered if it was possible to work this way so I'm excited to see that he's found banks that are). If you're not an Architect can you list that as a cost if you don't hire an architect? I don't think the bank will accept a 15% fee for a "Home Designer". This would mean partnering up with someone which goes against what he's teaching: Being in complete control, having no partners, cutting out all the middlemen.
I don't know how these construction loans work, but I don't think the bank is going to give you several hundered thousand dollars to give to your Architect unless you actually have an Architect. But then again you don't have to be a contractor to be GC on your own project.. but do you get the contractors fees as part of your construction loan if you do it this way?
And then there's the intangible of being an Architect with some credentials, the title Architect might not cary a lot of weight with a bank, but it carry's a lot more than being a "designer" or intern or entrepreneur whatever clever title you can come up with.
yeah i think he may have been skipping over the license issue because he mentioned the that 'AIA made me a Fellow' as dissapointing as it as that skirted the issue it may have been out of respect (but that's just speculating) However, in a way he's right, you don't need it to create a building, technically you just need it to permit your drawings. BTW i'm speaking for residential arch....
He quickly went on further to state that there are ways around it: network with other architects, negotiate a small fee & conditions for them to stamp your creation. thus, justifying the 15% fee...
Personally, I've had offers in the past to do just that but i don't think i'm ready yet to juggle that plus my day job... but the point of this rant is that there are ways around it. Actually, that's basically my day job, boss gives me a client, i design their house periodically checking with boss, i draft the plans, then he stamps 'em...
i was by my lone self psycho, thanks for askin'
if you're not licensed then you're not really "architect as developer", you're just "developer"
I think puddles is correct...just be a fucking developer and call it a day
Well the issue is that (a big) part of his model is based on leveraging the value of the architectural services which is what you as the architect / developer bring to the table. These services you front = capital. This means you can get into the game with little to no money of your own. If your just the developer you don't bring that value and can't use that as capital. That means you need big bucks to get into the game. There were some other advantages that avaliable to you as an architect and those are the things I'd have liked him to spend more time on.
Anyone interested in "architect as developer" scenario should look into David Hovey of Chicago and his very successful design-build firm Optima. He does highrise residential and mixed use projects, and has a strong "design + cost efficiency" philosophy of practice. There is a recent monograph on his firm's work. Hovey started out as an architect at a large Chicago office, branched out as an independent architect/developer of townhouse and lowrise residential projects, and in past ten years has done very large urban projects. He has the best (and most successful) model of a practice were architect controls design, construction, and marketing of his design product. Very impressive operation.
[b]Well the issue is that (a big) part of his model is based on leveraging the value of the architectural services which is what you as the architect / developer bring to the table. These services you front = capital. This means you can get into the game with little to no money of your own. If your just the developer you don't bring that value and can't use that as capital. That means you need big bucks to get into the game. There were some other advantages that avaliable to you as an architect and those are the things I'd have liked him to spend more time on[b]
Is this the case?
Do you banks see your architectural services as being an asset?
That's great news.
They do.
they do IF they like your dick busch designs.
I don't think any of us can hold a candle to Dick Busch
c'mon guys, you don't expect him to go over every little detail of what encompasses the last 15 years of his practice in one day do you?
If you are interested in becoming an architect/developer, I highly suggest moving to San Diego and attending Woodbury University's March RED program (masters of architecture in real estate development). It is $30k, and is a 12 month program, taught by not only Jonathan Segal, but also Ted Smith, the father of architecture/development, along with Sebastian Mariscal (who used to work for Jonathan), and Lloyd Russell (AIA young architect of the year in San Diego)....It is a great program and you get one on one time with each of them. They show you step by step how to be your own developer.
Jonathan is a rather egotistical guy, but wouldn't you if you had $20 million in the bank and you were your own financier?
And yes, you should be a registered architect if you want to be a developer. This allows you to use your CD's as equity in your proforma, basically it is as good as money, if you are an architect. Jonathan uses 12% of the construction hard costs to determine what his fee is. His proforma is rather simple, since he has been in the business for so long he knows how approximately how much per square foot the construction will cost. He is his own gc, although he is not a licensed gc, so therefore to the bank he is "owner/builder". He has credentials which allow him to go to the bank and get a loan with no questions. In today's lending market, it would be impossible to get a construction loan (especially if you are to be owner/builder), without a general contractor's license (which is rather easy to obtain, you need 4 years of experience as a foreman and if you went to architecture school, you receive credit for 3 years!)
You must also understand that Jonathan does not want to make it too easy, then there would be architect/developers everywhere and yes, there would be greater architecture, but there would also be more competition.
Jonathan does only multi-family rental projects, because in San Diego, rents increase pretty much every year, and he can refinance after he is finished with construction to obtain the money to pay off his partners...(this is what he did in his beginning years, now he doesn't use partners) He is actually on the verge entering the commercial market, he is to build a 7 story mini high rise in san diego's little italy district.
If you are really interested in being an architect/developer....go find a lot or a home on a lot that is zoned for multi-family. In many cities, there are single family homes on lots that have been upzoned over the years. In san diego, in many neighborhoods all single family lots are actually zoned to allow 2 to 4 units. The easiest way to start is to design and build your own home. If you are owner/builder, you will build for less than market value, then you can refinance to take out equity to finance your next project.
As far as building rentals is concerned, your building is "valued" by the bank with a capitalization rate....that is, you determine your Annual net operating income (the total of rents received minus insurance, vacancy rate, maintenance, etc, and divide it by teh capitalization rate of your city (you can ask your bank what they use)....hopefully, your capitalization value is more than your total development cost (cost of everything inclusive to design and build your development, including permits, fees, hard costs, etc)...this is all determined by your proforma while you are in escrow for the property in question.
So coolguynick, do you think it is worth paying 600$ for his 8hr seminar? Or is it something that a little research can accomplish.
...a quick question - does this guy actually build it himself, as in he has a construction firm?
I recently attended his mini lecture in KC, which was quite inspiring and encouraged me to give his "method" a whirl.
I will be going to the D.C. lecture and was able to wrangle a deal.
If anyone is interested, i have secured a discount rate if I can get a group together. Pricing is reduced from the current $795 to $595 or as low as $495 if a can get 15.
Contact me at andrew@acronymdesigns.com if interested
did anyone record the dc seminar? I tried but my recording came out bad and hard to understand. I would really appreciate any help. I am moving into a project and would like to refresh my memory of the details he discussed. THanks
bri, if anyone responds to you please send me a line. I'm curious about what he said also.
on another note, I wonder how Segal is doing right now. I am starting to hear stories of very well capitalized RE guys in LA starting to sell some of their holdings. Dunno whether bc of cash flow issues or just worried bout future...
It has been well over three years since last comment in this thread. Any of the original commenters care to update their perspective?
Segal was a both a gust lecturer and Juror and the architecture school I attended(New School of Architecture in San Diego) heaven help the fool that didn't have their shit together when he came around - he would take you apart
After I saw this thread necro'd, I went and pulled out my info book and notes from the Oct. 2007 Segal seminar in LA. Most of the advice in there is still good, if rather generic, but the economic environment has completely changed. We're now staring a deflationary depression in the teeth, where in 2007 we were at the roll-over peak of a multi-decade inflationary credit bubble. So the logic of real estate development is necessarily different moving forward. Also much more difficult, though certainly not impossible. The biggest change is one of emphasis: from capital appreciation to operating cash flow as the primary revenue model, and from leverage to equity. Or, in other words, changing back from the speculative model which drove most RE dev during the last sixty-plus years to an investment model.
@gwharton Are you aware of any Architects shifting their focus to that of Developer? After attending that seminar in 2007 were you inspired to consider it? It seems so logical to consider that route but how to make it happen? I am getting mixed signals about the value of these seminars beyond making a few bucks for the presentation team. Full disclosure that I did not attend and was not even aware of it at time. Thanks for your thoughts.
See other discussion.
MONEY. If you have it, you might be able to get into the game, if you don't, unless you work for a larger company that does, you cannot. The economic mess we are in will keep any ambitious developers out of the game for sometime (due to lack of credit on both sides - developer's can't get it, home buyers can't get it, makes for a no-one-wins game and why we have only rentals over saturating the market).
I am sure the seminars were great 5 years ago when you could at least debate whether you wanted to get into the game, but now it is just not that easy.
You need money to make money, more so now than ever. More examples of why the rich keep getting richer.
Unless you are Donald Trump and grow up in the real estate business and then inherit a huge amount of money, very few people just wake up in the morning and say "hey, I think I'll go into the r. e. development business today".
I've worked in, and around, the r.e. development busines all of my long career. Most of the succesful developers I have known started working for another developer early in their careers, learned - from the inside - how the process works, demonstrated an aptitude for the work while employed by others, carefully cultivated solid contacts in the investor and banking communities, made - and saved - a good deal of money, and eventually struck out on their own to do their own thing once they were well prepared.
As in all things, it typically takes years of experience, and lots of hard work, to become an overnight success in the real estate business.
dml955i - Thanks for the information about the seminar! I have been toying with the idea of buying his online courses at architectasdeveloper.com, but I think I may hold off on this. It seems like the best idea (if you are an Architect starting from scratch) is to start small and work your way up. I am definetly excited to start building, ie; Architect-Led construction, similar to Peter Gluck's model. I do see the Segal model being a landlord-producing income w/ net 0 taxes, which is a darn good idea! But starting small, like a 4-family, construction costs in this market make it hard to make a decent profit, you would be the owner at least but after all that work then barely braking even on the mortgage! - Thx again.
@cmissle33. Do you think it's about "economy of scale"? A four plex may be a lot of money relatively speaking but still would not have the scale necessary to represent good cash flow.
Keith,
I began combining development and architectural practices back in 1998, doing suburban office buildings and ultimately moving into apartments, so it wasn't a new thing for me. I went to Segal's seminar to see if I could learn some new stuff from him. I did, but nothing earth-shaking. By that time, I'd divested myself of all my projects anyway, just like he did (so much for "never sell"...HAH!).
Arch/Dev became kind of a fad during '05-'07 (the peak of the RE boom), but now that it turns out development is hard and full of risk, most architects have been scared off. Most of the higher-profile Arch/Dev firms in my neck of the woods turned into spectacular financial failures '08-'09.
Listen to quizzical. The best way to learn RE Dev is to do it, not go to a seminar.
It definitely is an economy of scale. I guess that's what makes it so hard to get into the business. I think a good approach for an Architect now would be to start working as the GC on a small project then once experince and connections are made in the construction process (and capital is made) then moving in to the realm of developer seems more realistic. I am actually starting a residence soon (on the side) and will be the GC. It's kind of funny actually, a lot of our clients are developers and GC's and we usually are performing half their duties during construction (without the compensation)! I think they are trying to keep a low overhead and passing these duties off on to us..but the alternate is no work at all..
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 will change your approach to professional practice and empower your career. Email me at onyx.archinect@gmail.com if interested.
give it a rest onyx_one -- you're becoming a bore.
This isn't craigslist.
actually, on craigslist you'd get banned (or at least your posts deleted) pretty quickly for trying to openly sell pirated stuff.
Block this user
Are you sure you want to block this user and hide all related comments throughout the site?
Archinect
This is your first comment on Archinect. Your comment will be visible once approved.