What advice do you have for those of us who are new or soon to be graduates?

Work for 2 firms – 1 small and 1 large – to get to understand the business and process of building architecture.

Do you have any suggestions for areas of research that might pertain to “architect as developer”?

EXPERIENCE!!

What are the first steps you would recommend to a person just starting out as an “architect as developer”?

Design and build your own house before moving onto other projects.  

Would it be wise to speak with an accountant to understand the taxes and financial breakdown?  Or perhaps an attorney, who could help lay some groundwork for a purchase?

Always.  I suggest that you do this immediately, and that relationship will last a lifetime.

What would be a recommendation to start being an ‘architect as developer’ given the following scenario, which I am sure is typical for the majority of attendees:
-       Licensed architect with 10+ years experience
-       Married, young children: do not want to design SF and move- would like to stay in current house
-       One income family 

Don’t give up your day job.  Begin with a small unit project so that your exposure is minimal, but you will experience the events as would happen on a much larger project.

LICENSING
You state that for liability reasons you would suggest that we do not become licensed. Your approach to deal structuring relies on your ability to draw (Johnny Bucks) to reduce capital requirements. If we are not licensed.... how can we take advantage of that approach?

This is a difficult question….Tell the banker that you have an architectural degree, explain your experience, and inform him/her that the liability is an issue.  Explain the difference between an architect and a contractor…and they will think that you are actually smarter.
No one has EVER asked me if I have a license, and you can put Associate AIA on a business card.  No one really understands what AIA really is anyway.

From a developers standpoint, would it be smarter to design the buildings myself, and have an outside architect stamp them, being without my architecture license at this point?  

I frown on architect’s stamping other’ work, so you’ll get no support there.  It’s just an ethical matter and hang-up that I have.

FINANCING
My assumption is that you take out the loan based on project value and pocket the difference between construction loan amount and value.  You also take out the loan interest only for 30 yr. with the idea that you keep your operating expenses lower and plan to sell the property close to the 30th yr. and pay capital gains on any appreciated value.
Is this the correct approach?

Typically what is the time line for required financing when starting out with little capital?

Most likely you will need investors for your first few projects.  But you don’t want to purchase and hold land because that will cost you interest, carry and reduce your investors return.

Regarding the money issue: Looking at the examples in the back of the book ("what really happened") - when you go to the bank with the drawings and you put a line item in there for 100K for the architect… are you actually taking that money to live off of while you are developing the project? Or is this something that is purely on paper that bumps up the net worth to increase the value, thus making more profit (capital gains) on the back end?

You eventually want to be in the position that you can use the drawings and your services as capital and live off rental income.  Unfortunately you initially need to take fee income from your project.

How do you make your money? Is it the 100K that the bank provides in the loan? Wouldn't that appear as personal income and not capital gains?

See previous q&a.

Do you utilize new market and/or renewable energy tax credits in your projects? If so, why are they not shown in your proformas?

We use the renewable energy tax credits as a bonus, not as initial profit.  Also, pay attention to the applicability of these credits in applying to the alternative minimum tax.  In this regard, it’s not pretty.

DEVELOPING

Both.  This is where the architect side takes over.  Do your research and make your own decision.

How do you evaluate whether a deal is feasible or not? What is the threshold for go/no go decisions?

This is a complicated question.  You obviously need to make money and have a profitable project.  Don’t force it, it either does or doesn’t work.  You will know as your plans and proforma progresses.

It would be very helpful if you could give us more information regarding the time sequencing of events for a multifamily development. For instance, it seems that all the costs need to be worked out before the proforma can be put together – so you have to have the property and the building designed & bid. Is this true?

Yes, you need to have preliminary rough estimates.  Remember that if you eliminate the general, and self perform some of the subtrades, you will be able to build for less.

RENTING
How do you finds tenants?  Is there a good lease agreement to protect the owner (me)?

We wrote our own lease, it is nothing special.  The tenants seem to find us!!

How are units delivered?  Finished, etc?

Units are delivered rent-ready.

BUSINESS MODEL
You stated that you have no employees - they are subcontractors. Can you explain the benefits? Can this approach allow my company to create architectural drawings?

Keep it small and try to keep it all in house.  There is then only 1 mouth to feed.  My formula was much better when I was smaller…learn from me…be an architect, not a manager.  Everything is protected and cash/savings are in a Family Limited Partnership.  Read Mintz’s Asset Protection book.

LLCs
Is Jonathan's construction work done through a separate LLC or shell construction company that he has set up?  If not, is it done through his architecture firm and does the bank have issues with including the contractor fee and P&O in the proforma?  Also, who would carry the workmen's comp insurance for construction labor he employs and pay the subs and hired labor?

Each deal is a separate LLC.  ALWAYS have work comp insurance. A L W A Y S !