Starting a New Business. Looking for Advice.

[Daniel Flesher]

I am a licensed architect living and working in Philly. I have an idea for a business but wanted feedback from other investors to see if this is something that people would be interested in. I also wanted to look at the potential pit-falls that I might not see because of my inexperience in real-estate investing.

The basic model of the business is that I would purchase property, most often land, then create the zoning and building plans, and sell the pre-developed property to a real-estate developer, netting the difference .

The potential benefit to developers is a shorter turn around for their projects. They purchase the land and the architectural plans are already completed. I already work with a lot of developers so I am aware of zoning laws, what developers are looking for, etc. I can also crank out a building set on my own in roughly one month (anywhere from single family to six units). So in the time it takes for me to close, I can have the project ready to go back on the market.

The potential downsides to me are the closing costs on the property, buying/selling fees, carrying costs if it doesn't sell quickly, designing something that a potential buyer doesn't want to use and potentially limiting my buyer base by excluding non-developers from by buying pool (unless it's single family). So I have to pass these expenses on to the next buyer or let them eat into my profit (which in essence is my architectural fee).

I'm wondering how I should structure the business to limit my liability, and show as much "loss" on paper as possible to reduce my tax load.

My questions are:

Is there any business structure that would work best for this?

Does anyone else think this is a good idea? Would you buy from someone who is doing this?

Is there another opportunity I am missing, such as wholesaling if I can get the plans completed fast enough?

Are there other downsides I am missing?

Thank you all for your responses!