In the Irish Channel area of New Orleans, 12 new homes cluster on a former warehouse site. Angular, covered in corrugated metal, and painted white, the homes are jigsawed in a way that makes room for patios, courtyards, and parking. Inside, they have polished-concrete and wood floors, energy-efficient fixtures, and soaring ceilings. But what’s most special about these houses isn’t just their modern design: it’s the creativity that went into building on a site where the law, at first glance, only permitted three single-family houses.

In a bid for density, sustainability, and affordability, architect Jonathan Tate conducted legal alchemy and found ways to subdivide the land and use multifamily zoning ordinances to construct 10 fully detached homes and a duplex.

“I tried to push the land as far as I could,” Tate says.

Tate purchased the land and developed the project himself—an unusual scenario for an architect. Using design to maneuver complicated zoning and ownership laws, he was able to build an experimental infill project that adds high-quality, much-needed housing to New Orleans. Though Tate considers his firm to be a traditional architectural practice, this isn’t the first time he’s served as his own developer. In 2016, he designed and built the first of his Starter Homes—compact single-family houses built on inexpensive and oddly shaped infill lots—which helped establish his reputation as an experimental and forward-thinking designer.

“If anything, our idea of developing was just to implement an idea. It was also a form of advocacy for the discipline so architects can engage in projects and possibilities that precede [the traditional design process],” Tate says.

A closer relationship between architects and developers—and sometimes a blending of the two—is unlocking more creative construction and problem-solving in the built world.

The design-development duel

Buildings can be constructed by a number of different entities: architects, engineers, developers, contractors. One scenario—common for custom homes—is that architects design a building, then bid it out to a contractor who subcontracts to tradespeople. Sometimes architecture firms develop their own projects and call themselves “design-build” firms.

Architects design buildings, so the assumption goes that all buildings are designed by architects. That’s not always the case, especially when it comes to multifamily developments, tract housing, high-rises, and master plans. Developers, along with engineers, come up with the program of a structure, using guidelines from zoning and building codes to shape the size of rooms, number of floors, footprint, and setbacks. Sometimes a developer requests proposals from many architects and chooses one. Sometimes an architect is brought in in the middle stages of a project to style the building’s envelope or to address a particularly sticky problem. They’re not always involved after something breaks ground. And the builders aren’t involved in the design process, which has led to some high-profile blunders.

In Brooklyn, SHoP Architects, the developer Forest City, and prefab builder Skanska worked on a residential high-rise, which was the world’s tallest modular building when it was proposed in 2011. The 32-story building was plagued with stop work orders, delays, leaks, and lawsuits. The builder sued the developer, alleging a bad design, and the developer sued the builder over faulty construction.

Meanwhile, the lack of design in development—particularly in multifamily residential projects—has led to a proliferation of the same bland and boring buildings in cities across the country.

Developers often perceive architects’ contributions as expensive, unnecessary, and time consuming. Architects often worry that developers will value-engineer the “design” out of a project or focus too much on practicalities. “There’s an antagonistic relationship because the sense is [architects] don’t share the same values and goals as other disciplines involved,” Jonathan Tate says. “Builders don’t care what it looks like, developers are looking at the bottom line… it’s a financial transaction versus a design and experience. And that’s a really poor way to see the world.”

Michael Samuelian—an architect who has spent much of his career working for developers and who led the Hudson Yards megaproject and post-9/11 reconstruction of lower Manhattan—believes architects and developers need to learn from each other. Recently appointed to lead the Trust for Governors Island, Samuelian is taking a design-lead approach to preserving and redeveloping the historic site in New York’s harbor. And this fall, he is teaching an advanced design studio on developing Governors Island at the Yale School of Architecture.

“Each profession shares optimism,” Samuelian says. “Architects believe design can solve everything. Developers believe the world will be better with their building in it. … Architects should be more sensitive that they exist in a project for a very limited time: A project starts well before they’re involved and lasts well after. Developers can benefit from valuing design, but knowing it’s not equal: Just because a building is well designed doesn’t mean it’s expensive, and, vice versa, just because it’s expensive doesn’t mean it’s well designed.”

The dichotomy of architecture and development exists partly because of how these professions are traditionally taught.

“The culture of architecture is that of a high art and being careful not to get too sullied and dirty with reality,” says Chris Calott, an architect, developer, and chair of Real Estate Development and Design master’s program at the UC Berkeley College of Environmental Design. “Particularly in architecture school, it’s a mindset and tradition that’s hard-fought. I always say you can ignore [the realities of development] but you do so at your own peril.”

UC Berkeley’s program welcomed its first students this fall. It teaches people with an architecture background how to better understand development, and encourages design appreciation in people approaching development from a real estate perspective. The inaugural class of 16 students is composed of designers, house flippers, and people working in affordable housing and policy.

A handful of architecture schools offer graduate degrees in real estate development, which is typically the purview of business schools. Columbia University’s GSAPP launched its master’s degree program in 1985 and has graduated 2,185 students since then. Woodbury University also has a master’s program, and so does Pratt University. MIT offers an interdisciplinary course of study. Before establishing UC Berkeley’s program, Calott led Tulane University’s master’s program in sustainable real estate development. Teaching design and development together fast-tracks the appreciation and expertise each side needs to really understand the other, he says.

“The best development companies are doing the best projects by working with very good architects and solving problems together,” Calott says.

The business case for design-led development

If architects and developers collaborate closely, both sides see advantages. But architects who have embraced development work say they’ve experienced windfalls creatively and businesswise.

When Lightstone, a developer of residential, hospitality, and commercial projects, embarked on 40 East End Avenue, a forthcoming 29-unit, 20-story boutique condominium on Manhattan’s Upper East Side, it integrated design, development, and marketing from the beginning, betting that the approach would assure the project’s success in a fluctuating market.

Lightstone enlisted Deborah Berke Partners to design the building and Corcoran to create the marketing strategy. The three worked together to make sure the building would be unique, desirable, and, ultimately, financially successful. They conducted detailed demographic research about the target market for the building—which informed structural detailing and interiors—and examined New York City zoning code for opportunities to increase buildable space and therefore profitability.

The team ended up selecting energy-efficient mechanical systems, using thermally resistant walls, adhering to “quality housing” rules like maintaining neighborhood character architecturally, and including amenities like landscaping. The end result? A residential building that’s stylistically distinctive and structurally ambitious.

The building—with its a masonry facade, punched windows, terra-cotta detailing—references historic structures found around the neighborhood. Inside, marble floors set in a black-and-white herringbone pattern and a sweeping staircase greet residents and visitors. The interior palette of natural materials and richly textured textiles appeals to the senses. The architects also added extra storage and a coworking space to appeal to prospective buyers.

The financial boons of becoming a developer aren’t just in the rates a building fetches. To Jonathan Segal, becoming an architect-developer made sense creatively, as well. “We can do what we want and answer to no one,” he says. “I feel bad for architects that get pummeled and hammered and work cheaply and become bag boys when they could do this.”

In the more typical business structure, in which a separate owner, architect, and contractor work on each project, creative differences or rising costs can quickly sour relationships. When things go wrong, it’s the architect who gets blamed.

“The triangle is problematic from the start,” Segal says. “If you remove two of the points and I’m the architect, owner, and contractor, when I do mess up I’m able to fix the issue on my own. If something doesn’t turn out how I wanted, I can fix it.”

Trained as an architect, Segal worked for two firms before launching his own. For his first solo project, he tried shopping a row-house development, which he designed for his thesis, around to different developers until one of them encouraged him to develop it himself. “He told me: ‘You’re an idiot. Don’t be an architect; develop it yourself.’”

Segal found some inexpensive land and constructed his row houses. The profit he earned the first year exceeded his expectations, and he continued on his trajectory as a developer who designs his own projects. He specializes in mixed-use residential and commercial infill projects.

Because his firm is essentially the sole point of contact for a project, his subcontractors receive swift responses to questions and issues that arise on projects. He has strong working relationships with them as a result, which leads to faster construction and more leverage in cost negotiations for future projects. There are also legal benefits, Segal points out, that ultimately save time, money, and creative energy. He says he’s only been sued three times in the past three decades of business, which he claims is a low rate for the construction industry.

“We have control and we’ve utilized it to keep out of trouble,” Segal says.

Since launching his company in 1988, Segal constructed 245 buildings in San Diego and concentrated much of his work around the city’s Little Italy area. His projects include micro-unit apartments, luxury lofts, adaptive reuse, and more. His business structure has allowed him to build a cohesive, intentional body of work.

“My goals are to influence and change urban San Diego,” he says. “It’s not about making money or creating an object; it’s about creating change and a legacy. If you made a shit ton of money on bad things, who cares. But if you have a legacy on improving something, that’s great. It’s important that happens.”

Creative problem-solving in a world where it’s harder to build

For architects to create measurable change, scale is needed, which is where either becoming a developer or partnering with a like-minded developer becomes essential.

The building industry is facing a number of challenges, including labor shortages, a volatile materials market, and escalating construction costs. Meanwhile, bureaucracy has slowed new development and land is becoming prohibitively expensive in areas where new structures are needed most. Macro issues, like climate change, are also affecting the characteristics of buildings and neighborhoods. Developers and architects have to get more creative with how—and why—they build.

Allison Arieff—an architecture critic, editorial director of the urbanism think tank SPUR, and lecturer at the UC Berkeley College of Environmental Design—sees a real mismatch between the buildings being built and what people need from their buildings, particularly as it relates to housing. Most housing in the U.S. is designed and built by developers, and that’s led to generic homes and neighborhoods tailored for investment rather than livability.

“Ultimately, there are a lot of deeply ingrained concepts of what homeowners want that have a lot more with the building industry and realtors than the reality [of what homeowners desire],” Arieff says. “You’re not thinking about what’s useful to the person in it. In a resale-obsessed market, they build to perceived future value versus what meets someone’s needs.”

She advocates for addressing sustainability head-on in housing, designing homes for community, and making spaces that will work for different genders and age groups instead of an archetypical buyer. Architects’ input on residential developments could go a long way toward improving the quality of life.

“If you look out at developments across the country, there’s homogeneity and repetition and lack of appreciation for context and planning for creating neighborhoods. It’s pretty stark,” Arieff says. “I think we’re suffering from the results of not doing that… For example, a development might have a shopping center next to it, but you can’t walk to it. It’s tiny little details like that that are super frustrating and don’t have to be that way.”

David Baker Architects, which specializes in multifamily residential projects, leverages strong relationships with like-minded developers to construct affordable and environmentally minded housing, including collaborations with Bridge Housing, a mission-driven nonprofit developer, and Holliday Development, a for-profit company known for mixed-use projects and rehabbing industrial buildings into live-work spaces. The firm has become nationally recognized for its civic-minded body of work, much of it in San Francisco, amid an unprecedented local housing shortage and stringent construction regulations. The architecture firm usually sticks with a project through construction to make sure the most important elements endure the inevitable value engineering.

To Daniel Simons, a principal at the firm, having that strong working relationship with development partners and a willingness to see the bigger picture helps ensure a project will be successful, even if it has to be redesigned due to cost.

“Projects get messed up for lots of reasons—it’s like death by 1,000 cuts,” Simons says. “Sometimes it’s because of a big decision at the beginning, but a lot of times it’s little things that get lost on the way, from a bad choice or a lack of vision. It’s really important to stay involved and keep involved at all stages.

“As architects, we have the opportunity—and I think the responsibility—to always be advocating for the things we think are right for a project—like sustainability, livability, thermal comfort or whatever it is,” Simons says. “It’s easy for developers with lots of experience to say ‘We don’t do that,’ and for architects to say, ‘Okay, we don’t do that here’ instead of saying, ‘Things change.’”

David Baker Architects learned how to be a good development partner through years of experience and trial and error. Jonathan Tate was able to build his infill projects because his curiosity about zoning and insurance regulations led him to building opportunities most architects and developers would overlook. At Hudson Yards, Michael Samuelian created a high-rise neighborhood on top of active train tracks by taking a design-led angle to development. The marriage of design and development is creating some of the most exciting built work today.

“Real estate development needs to take design seriously because it can add so much value, solve problems, and make better urbanism,” Calott says. “[Architects] naturally think about cities and development. We are inherently working in the real estate industry already. Why not be mindful and be better?”

Shouldn’t We All Be Developers is a book by Architect & Developer Roger Zogolovitch, founder of {Solidspace}, a design and development company in London. I was really excited to pick up this book. It is a short book now only available on Kindle at {Amazon.com}. Roger recently gave an interview on the Business of Architecture podcast with Enoch Sears {here} which is really fantastic and worth a listen. Roger has a lot of experience and insight as an architect who develops work.

From the title and list of chapters, I really thought it would heavily touch on architects (who I thought was the “we”) developing their own work. I was wrong. This is more of a manifesto of utilizing what author Roger Zogolovitch calls “gap sites.” London real estate, like most of the western world, has seen a surge of growth in the past decade. Prices are unreachable by the general populous. Zogolovitch wants cities to focus on smaller, leftover parcels of land that go undeveloped. He identifies gap sites as “spaces next to railways, behind houses, around factories and warehouses.” He lobbies for an increase in providers of housing through more permissive and “rational” legislative regimes.

There really isn’t much beyond the idea of gap sites. He walks through a few of his ideas, most of which are very contradictive, and ultimately include a heavy-handed government giving him an advantage over the market. There is almost a complete naiveté in his belief that society would be best off if we handed over the keys to a select few, who would naturally do the right thing. “If enough smaller guys got together, they could make a better fist of things than the big battalions who seem to dominate ideas about where and how we should live, and what it should look like… If we champion this smaller scale, independent developer, not only will they use their skills and imagination to build that supply, they will use their development instinct to identify these gap sites to deliver their projects.” I don’t buy it. Most developers are chasing the last dollar. Criticism aside, he does create really nice work. His recent project that he developed and London firm AHMM designed is beautiful and has won many awards.

Zogolovitch became frustrated as a practicing architect with the professional practice in the UK. “I decided to take on a wider responsibility for my work. I wanted to be in control of the projects that I undertook and I wanted to be able to engage with all aspects of making buildings, not just their design.”

Zogolovitch argues in his first chapter on Planning that the planning permission required in London real estate waters down a project to the quickest iteration that the designers could achieve. Planning permission is critical to a development’s financial success, and should be done as soon as possible in the design process in order to secure the project for the developer. This “determines a building be built to its earliest and least developed design iteration, allowing the quality of the finished development to suffer.” This is his argument that government should get out of the way of development. Let there be an as-of-right system similar to other global cities such as New York City.

In the second chapter on Land, Zogolovitch discusses the trading market for undeveloped London raw land. There is apparently a value assessed to a land’s potential, and that value is traded between international investors until someone takes that raw land and begins construction. At which point, the potential value is void and the real value will be assessed. This trading market drives up prices of not only raw land, but all land within the city and makes homes writ large unaffordable for many Londoners. Zogolovitch wants to end this practice.

Zogolovitch also brings up the fact that nearly sixty percent of undeveloped land in London is owned by the Local Authorities. Zogolovitch proposes to create a new government entity called the London Land Commission (LLC) that would assemble these parcels (both those owned by Local Authorities and ones by foreign investors) solely to promote the development of new homes.

This entire argument is counterintuitive to Zogolovitch’s initial argument of less government interaction. This time, when it is advantageous for the “small, local developer,” he wants a heavy-handed government to give him a leg up over the market. While he personally may have the best of intentions, I cannot buy into the idea that all “small, local developers” will have equally good intentions. If there is an incentive being handed to developers, of any sort, those seeking maximum gain regardless of quality will find a way.

In Zogolovitch’s fourth chapter on Brand, he argues that larger companies such as John Lewis should be developers. John Lewis is a large department store chain similar to Macy’s in the United States. He argues that a large brand name could help reassure otherwise NIMBY’s (Not In My Back Yard) that the development next to them is of quality by quality people.

“Followers would positively welcome John Lewis branded housing next door to them for they would trust the brand to act in as considerate and thoughtful a manner possible so as not to disrupt their lives or run an untidy site during construction. The would expect the brand to deliver on their promise of quality, carefully priced housing, good value and customer service as principles upheld throughout.”

This entire idea blows my mind. While I do agree that a branded product is a really good idea for the real estate market, and an identity that people could gather behind would likely help sales, none of this would help in providing housing to people at a lower price. You cannot run a jobsite that will bow to the needs of neighbors without driving up costs or time (which is also cost).  This is also another contradiction of Zogolovitch’s argument within the book. He wants small developers, but the biggest name brands? Large companies, especially ones who want to protect their brand identity, which is what he is arguing for, are not going to work with small, local developers. They will be bigger than Toll Brothers or Turner Construction.  This contradicts a lot of his earlier arguments.

I personally believe that large-scale consolidation of home building will happen in America. I do believe this will help drive some costs down, but most definitely at the expense of watering down the product even further.

In the fifth chapter on Money, Zogolovitch discusses the London mortgage market and how it has escalated in recent years to prohibit many people from every qualifying to finance a home. I was really hoping that this chapter would have real information and proposals of the financial realities of development. Instead, Zogolovitch once again is asking for this new government entity, the LLC, to undermine market speculation and “enlist the support of a new brand of independent developers.” He argues that the LLC should legally separate land from the buildings developed atop of it to drive down the costs of development. Instead of the LLC selling off land to developers, though only these small independent ones, the LLC would lease the land to the development and retain ownership. This is an interesting proposition, but once again argues for a heavy government hand helping a select few developers. His firm, Solidspace, would no doubt be one of those.

Overall, I think that Zogolovitch has an incredible naiveté about development. “Independent and small-scale developers are a resource for the making of more homes and have the right skills needed to work on small gap sites.” There is no evidence that small-scale developers have any more morals than any other developer. Trust is an important asset for all parties in the construction industry, developers, architects, contractors, subcontractors, etc. Zogolovitch argues that for the past 40 years, developers have picked the low hanging fruit as sites to be redeveloped and that the next phase of housing will be both more complex and more interesting as a consequence. This is likely true.

Overall, Shouldn’t we all be Developers is a decent read and worth a few hours of your time. It is a short book currently only available on Kindle at {Amazon.com}. The book is a manifesto on why we should exploit gap sites as a means of helping London’s current housing crises. Roger has developed some amazing buildings and knows his stuff. That said, I can’t help but be a bit agitated with his view of a heavy-handed government giving him an advantage over market economics. There is too much emphasis on the small-local-developer being a good guy.

I think his gap site idea is really great, and not the first time I have heard it. Architect & Developer Jonathan Tate of OJT in New Orleans is also doing something similar with his Starter Home* project. See more about Jonathan {here}.

In the summer of 2011, a group of designers successfully completed a Kickstarter campaign to build a pool that also filters water in New York City’s East River. +Pool raised over $41,000 to become one of the first modern-day crowdfunding campaigns for architecture. Two years later, +Pool raised an additional $273,000 to be used for research in a second Kickstarter campaign and currently anticipates construction sometime in the near future. In the summer of 2015, a similar project in London, Thames Baths Lido, raised £142,000 on Kickstarter to build a pool in London’s River Thames. Extremely similar projects have since shown up in crowdfunding campaigns in Berlin, Chicago, Houston, Melbourne, and beyond. Most of these campaigns receive funds in excess of what they are searching for, yet it is rare that successful architecture campaigns are actually constructed. This begs two questions: what happens to that money, and can architecture be crowdfunded?

One of the first projects to be successfully built using crowdfunding as a financial mechanism is Luchtsingel, a 400m long pedestrian bridge in Rotterdam. In 2011, the architecture firm ZUS raised over €100,000 ($135,000 at the time) to develop the bridge by offering to CNC-route the name of any donor who contributed more than €25 onto planks of wood that would be used in construction. The crowdfunding campaign was successful because it showed local politicians both the public desire for the project and the willingness of the public to begin funding it. The local government subsequently contributed the remaining €4 million required for construction, and the project was completed in the summer of 2015. Crowdfunding was the catalyst for taking the architect’s initial idea and making it a reality.

In 2013, David Loewenstein, Philip Auchettl, and Jason Grauten were completing their thesis project for their Master of Architecture programs. Together, they proposed an urban park in downtown San Diego; the hipster-type with a dog park, biergarten, and concert venue that would exploit vacant city-owned land. After receiving a plethora of positive feedback from their proposal, they decided to give themselves six-months to make the student project a reality. They launched a Kickstarter campaign and raised $60,000 in the first 30 days to cover the initial administrative costs and to prove to private investors and the city that the community was serious about having such a place in their community. RAD LAB convinced the city to temporarily lease them vacant land on which a large condo development was scheduled to be built. David, Philip, and Jason then approached investors and raised funds to build the temporary project utilizing previously used shipping containers. They limited their initial capital costs by requiring each tenant to purchase the container and pay for the renovation using RAD LAB’s design. The tenant would then pay RAD LAB for the lease of the space, who would turn around and pay the city for the land. Completing the urban park took a lot of hustle and collaboration between the city of San Diego and many private investors, which Architect & Developer RAD LAB successfully mediated.

I sat down with Philip Auchettl of RAD LAB who discussed his experience. “We were going to be a placeholder for future development. We used shipping containers so we could pick everything up and move it to a new location. That way we could reactivate somewhere else when it came time to move. That was when people started to get excited. I think it made people in the community more open to the idea of it. Anything that is temporary, people seem willing to give it a go. Anytime someone wants to build a brick-and-mortar thing, people line up with their pitchforks.”

Kickstarter-type campaigns have created interesting ideas and possibilities, but few results considering the staggering amount of money raised. Donation-based crowdfunding can be used as a catalyst for obtaining conventional financing or government support, but what about crowdfunding architecture as an investment? Can an architect pull together small amounts of funds from various sources to finance a building? Up until recently the answer was “no.” The Securities Act of 1933 made it illegal to market shares of unregistered securities such as interests in real estate development, which meant that people seeking capital were unable to publicly state that they were raising money for investment purposes to finance a project. The JOBS Act changed this and made crowdfunding architecture possible.

In 2012, Congress passed the Jumpstart Our Business Startups Act, more commonly known as the JOBS Act. This has allowed crowdfunding to permeate into real estate. You no longer have to rely on personal relations or country club connections to pull together a deal. You can put together an offering online that outlines a project you intend to develop with the intent of luring any investor, big or small. Prior to the JOBS Act, investors were required to have a net worth of $1 million or an income of $200,000 per year in order to participate in similar investments. Now, people of any income bracket are able to invest in a project, though there are limits set by the Securities and Exchange Commission (SEC) based on a combination of net worth and income levels. By imposing these types of restrictions, the SEC tries to protect smaller investors from risks they cannot bare, which could have devastating effects on the economy if a large portion of the population were to take part in high-risk activities.

A recent report from the Cambridge Judge Business School has shown tremendous growth in real estate crowdfunding. In 2013, online platforms generated $43 million in investments. By 2015, this had increased to $468m per year. As the more than 125 American based real estate crowdfunding platforms gain momentum, serious money is being invested in real estate in a more grassroots way than we have ever seen before. The industry is still adapting and finding its groove.

Two exemplary architects have successfully used the JOBS Act to help finance projects: Kevin Cavenaugh of Guerrilla Development, and Jonathan Tate of OJT. Kevin recently completed his second successful raise, and completed construction on his first crowdfunded project, both located in Portland, Oregon. Kevin was interested in trying a new pathway of financing that would allow him to develop his projects without the bank meddling in the process. “In 2009, I was really mad at banks,” mentioned Kevin when I spoke with him about his work. “Crowdfunding was this neat way to minimize the seat at the table of the lender.” In his first project, the Fair-Haired Dumbbell, he raised $1.5 million from regular people who were not accredited investors across five states. To do this, he spent 15-months and $200,000 in attorney’s fees to successfully complete the required SEC process in order to crowdfund the project. It wasn’t easy.

Kevin’s second project, Jolene’s First Cousin, raised $300,000 in three days through a different route. Kevin took advantage of an exemption from SEC registration under Section 504 of Regulation D, which permitted him to raise money exclusively in the state of Oregon through the Oregon Intrastate Offering (OIO). This allowed him to avoid the expense and bureaucracy of the SEC, but limited him to pursuing investors within a single state. The second project also allowed him to test his suspicion that investors would accept a lower return of 5 percent if investors knew their investment would fund a social cause; in this case, low-income housing for homeless people. Jolene’s First Cousin was so popular that investors funded it in three days! Kevin has been able to prove that crowdfunding is a viable pathway to create a project. It required a lot of legal legwork, upfront costs, and time. It did, however, result in a viable financial path forward. This is real money. Big Money. Take a look at the Fair-Haired Dumbbell and Jolene’s First Cousin crowdfunding videos. They are really entertaining, and also explain how participating investors receive distributions and the risks involved in the investment.

Kevin used his own platform to crowdfund the equity for his projects. This required him to deal directly with the SEC, the OIO, and all the bureaucracy therein. Jonathan Tate used a different strategy. He partnered with a third party platform, Small Change, who was already accredited by the SEC to raise funds through Regulation D and Regulation CF, which are the new parts of the JOBS Act that have only recently been available. I sat down with Jonathan to discuss the work he was doing as an Architect & Developer. “The hopes of the Reg CF is that there is an enormous untapped investor pool,” mentioned Jonathan. “The point of the JOBS Act was to get everyday individuals involved in this. I do think there is a lot of potential out there, but it needs to build up some momentum and visibility. Most people don’t understand what this is.” By going through Small Change, Jonathan was able to limit his required involvement with the SEC. He only had to supply the offering information, and Small Change took care of the rest.

All three of these projects still used a construction loan from a local bank. Neither Kevin nor Jonathan used crowdfunding for the entire amount. The crowdfunding was used as the mezzanine debt in the capital stack. In each case, this limited the equity that Kevin and Jonathan would have otherwise had to supply. In Jonathan’s case, his capital stack was $20,000 of sweat equity, $95,000 of crowdfunding, and the balance in the construction loan. “Essentially, the money that we are asking for is the equity requirement for the construction loan,” explained Jonathan. “It is 20 percent of the construction loan. But the rest of it shows up as our own contribution. We have money in the land and in soft costs. We are not reimbursing our services until the end when we sell everything. There is a preferred interest for the investors, and then they get a share of the upside afterward.”

Regulation CF of the JOBS Act offers the best opportunity to crowdfund architecture today. Partnering with a platform like Small Change is the most strait-forward path to get started. Kevin, Jonathan, and Philip all love the architect as developer business model. It allows the architect to have more control and gives the ability to design not only the project, but the process. “I believe that we learn a lot as architects and as developers,” reiterates Kevin. Crowdfunding architecture is one of the most unique ways to act as an Architect & Developer. I believe that the crowdfunding sector of real estate will quickly explode to a point of saturation by standard mediocre developers. I hope that more architects lead the way for a better future.

For more information on architects self-initiating work, see the book Architect & Developer: A Guide to Self-Initiating Projects.