Pathways to becoming an Architect & Developer

[Pablo La Torre]

My name is Pablo La Torre, and I have recently graduated from a BSc in Architecture. During my undergraduate studies I have always been interested in Real Estate development because it allows me as an architect to be more in control over a building project; its design, usage, and the profit I would earn, as opposed to a regular architect, however I am aware of the higher risks associated with development. Currently I am going through a transition phase, trying to understand which pathway to take in order to become a successful real estate developer, and taking on some freelancing architecture jobs to keep bread on the table.

To give you a bit of a background as a result of my interest in real estate, I did a couple architectural internships at two different real estate development companies. At the same time I took elective courses on Corporate Finance and Principles of Macro/micro economics in my University in order to understand more about financial, and economic factors that affect the real estate sector. Also I have been reading books on real estate such as "The Book on Investing in Real Estate with No Money Down", "ULI Real Estate Development: Principles and Progress" "The Book on Flipping Houses", "How Real Estate Developers Think", and "Architect&Developer". I plan to keep reading other books to keep broadening my basic understanding on real estate development. However, now that I have finished with architecture school, I am not sure which path to take. From my research and advice I have gotten from professors and contacts, I have a couple paths to choose from: 

1. 1 -continuing my architecture education and work experience with developers until I get my architecture license (3-4 years) , and then enter the development game partnering with an investor to either do a residential flip, or a simple single-family house development.
2. 2 -Keep doing architecture freelancing jobs, plus broadening my real estate contacts through real estate clubs, events, meetups, etc. Once I find an investor willing to do a residential flip (I would be doing all the foot-work, managing the flipping process and my partner would only put in the finances) I would reduce my freelancing jobs to focus on the flip, and eventually after gathering some capital and experience I can then go on to make a simple residential development from ground-zero. 
3. 3 -Start a Masters in Real Estate Development in order to solidify my knowledge and expand my network while at the same time finding possible investor to do a residential flip, and after gathering capital and experience go on for a residential development.

One factor that I still do not know how to deal with is my architecture license. I am not sure whether for option 2 and 3 I should aim to get my architecture license at some point since I will be acting as the architectural designer for the renovations and developments myself. I am not sure how much not having a license will hinder me as opposed to being licensed, because if paying a licensed architect to sign the drawings is not too much of an obstacle I would prefer to not get my license since the process is very tedious and takes time.

I highly appreciate anyone who would be kind enough to comment on my post, and I thank you very much in advance! :),

Pablo La Torre

[Nik Moushon]

@Pablo La Torre

First, you need to decide what you really want to focus on. Being an Architect & Developer OR just a developer? They are two completely different ways of doing developments. Neither is wrong but they take two different paths and provide two different things for the owner. I will quickly do a brief explanation of the main difference. There are a lot of differences and similarities between the two but on a couple of key major things that are different. Knowing what these are will help you decide which direction you want to go. 

With being a Developer (Dev) you are relying more on other people than you would as an Architect & Developer (A&D). Not that that is bad or wrong but a key difference. As a Dev your main, and sometimes sole goal is to get your investors their promised returns and your partner's as much profit as possible. Again those aren't bad things but a key difference that I will expand more on later. In many developments, the bottom dollar drives almost every single choice on the project. This could be anything from a material choice to cramming that last unit on the site....even at the cost of the design. I have worked for a large developer in the DC area and have experienced this first hand. You will obviously get developers who care more about the design than others and those willing to spend more to make the end product better but the vast majority fit the typical developer stereotype. That stereotype exists for a reason. 

A&D is not a mantra that describes an Architect that is part of the ownership of a development. It really is about that the design (and designer) is in control of the project. This philosophy is meant to be the exact opposite of the traditional role the architect plays in the development world. In A&D, the architect is meant to be the sole voice of decisions and that the design intent of the project out ways the bottom dollar. To take on sites/locations that other developers would run from because the challenges are too much but an architect they see it as a welcome challenge...a lot of time meaning they can get a steal of a deal because no one else want to even look at it let alone try. With A&D the architect can choose (for example) to focus on making sure the development meets LEED standards or is a net zero building or any number of other factors that most developers would only see a waste of profit. Being able to control that your project is going to be unique and does not look like anything else without having to convince an owner of partners is very appealing to us. Though the ultimate goal of A&D is to not have any partners and only take investors (or at least partners that share the same mind set and values) that does not mean architects that choose to do A&D dont use partners that dont share their mindset and goals. Everyone has to start somewhere and a lot of times you dont get to be that picky....especially starting out. I'm sure with all the research you've done and books read you've come across Jonathan Segal. If not you should look him up. He's been the most successful at is and has really inspired a lot of people to follow after his model. 

If you couldnt tell I am an architect (working on my license). I've been practicing architecture for over 8 years now and am currently trying to pursue the A&D direction of development. If you have gone through architecture school already I would strongly suggest you go down this path. One of the main draws of being just a Dev over A&D is that you don't have to go through such a tough and expensive schooling that A&D requires. But since you've already done that path and got the degree why would you not? Licensure is way more than worth it and you will gain so much knowledge by studying for those exams...they arent easy though and are time-consuming. If you went to arch school and want to be a developer but dont want to become licensed...why did you go to school for arch in the first place? If you stuck through one of the toughest degrees to get I cant imagine you not having a passion for design....you will regret not getting licensed. Since you just graduated I would suggest starting now instead of waiting. You are still in the mindset of having to do a lot of studying....once you get out of that and on to a normal mindset of everyday work and life its much harder to get back into that mindset (especially once you get a family and kids....like I'm doing). Plus if you ever want to do any developments other than single-family homes and duplexes you will need a licensed architect for your project. Why would that not be you? That 5-10% of the construction cost that you dont have to come up with the cash for AND you can use that to be a part of your downpayment for loans. 

I will also add that doing freelance jobs on the side is really a pipe dream. MOST firms make you sign a non-compete clause....including development firms. The only exception to those usually works for family....which you are usually doing for free or dirty cheap. Not to mention that you would have to find the time to do it and buy the programs needed to do the CD sets. Plus paying for insurance and other overhead. Its not as easy as it seems. 

If I were you I would NOT go back for any more schooling in anything. The one thing that both architecture and development (as professions) have in common is that most of the knowledge you gain comes from experience in the field and working in an office...not schooling. So a Masters in RED is a waste of time and money for you. Especially with your Arch degree and other classes already. You have a solid base that any firm is going to want to see. Those extra couple years of time you spend in a Masters program (and probably $100k in debt) are not worth the sacrifice of those years in an office being taught by the professionals that actually work in the field full time. 

Unless you are going to do the work yourself on your SF flips for gaining construction experience I would suggest not even going down that path to do those projects. The best thing that will help you as an A&D is cash flow, not a lump sum when you sell. You can always find OPM...its much harder to find cash flow to sustain yourself while you are doing a project. I would suggest finding projects that are buy & hold....not flips. This kind of project will help you understand running pro-formas better than a traditional house flip. Because more than likely you are going to be doing construction work, so you gain that experience, but then you have to run numbers for the long run and making sure that you can make a profit every month for a long time and not just at the sale of the property. Now I will say there are business models of A&D that deal with building & selling a property but most A&D firms that I see start out with projects to hold for cash flow because that is what sustains them to do more & more projects in the future. Then eventually they might switch to selling while others will continue to hold...thats just personal preference at that point. 

If you have any questions about the profession or the ARE feel free to reach out. More than happy to help where I can.