Architect as Developer

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Hi All,
I'm an architect with a little over 10 years of exp. I've heard a lot about Jonathon Segal and his approach to development. That's something that I'd love to do one day, but will would like to take baby steps to get to that point. I'd love to know people's thoughts on the idea of the architect taking equity in a project instead of money up front. It seems like that could be a win/win for everyone. Or a maybe good way to get screwed....

Can anyone comment on things to be aware of, or to avoid, when using this payment method?
Also does anyone know of any architects who are actively either developing projects or taking equity? I'd love to talk to someone about this.

Since I have a good job and don't really "need" the money, it seems like this could be a great way for me to moonlight my way into some pretty good gigs.

Thanks,

Comments (10)

 
Most Helpful
Jan 14, 2020 - 6:43pm

It's an interesting idea but agree with CRE , in all likelihood no well-capitalized developer is going to agree to this. It also creates a conflict of interest...once the architect has a stake in the actual financial performance of a project they may arguably be incentivized to cut corners/reduce costs in order to boost the project performance and consequently their promote. Also introduces legal liability issues...ie, can I sue the architect for specific performance or on the basis of errors and omissions, and how do I do that if there is no tangible $ amount of their services.

 
Jan 14, 2020 - 9:32pm

I used to be in the position you're in (architect with about the same amount of experience) and I'm in development now. I took a more traditional approach to the transition- grad school followed by a development manager role.

Unfortunately, I think the previous responses are pretty indicative. Most successful developers aren't going to bite on your proposal, because the complexity and profit loss aren't worth the savings in fees. The sad reality is that architects don't make that much money. If you do a sensitivity analysis on a development proforma, you'll find that swings in overall A/E fees have minuscule affects on returns compared with other line items. Most developers would rather pay your invoices than go into business with you.

 
Jan 15, 2020 - 4:55pm

I think what you really want is upside. If you will delay payment until dispostion, that is value. Could easly justfiy a 10-20% increase is fee. Equity or even a performance bonus, creates a conflict that lenders and equity will frown on, not to mention whatever rules and pledges apply to your license.

“Capitalism: God’s way of determining who is smart and who is poor.” Ron Swanson
 
Jan 15, 2020 - 5:06pm

Jonathan Segal is the man. He also has the ability to get concrete for next to nothing (hence in concrete and glass designs).

Excited to see how his new development in little Italy does with micro units and almost no parking.

 
Jan 24, 2020 - 3:43pm

I appreciate the responses. You are all probably right, a well capitalized investor would prefer to pay for my services outright. I guess I need to find those that aren't well capitalized. Unfortunately I suspect that those people are also less than competent since money is fairly easy to find these days.

 
Jan 27, 2020 - 6:42pm
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