(You may love Brooklyn, but Brooklyn doesn’t need your ass. Go somewhere that does.)”
Ryan Terry‘s statement has two parts and you might stop at the evocative opening; “Find a place you love…” The second half is just as critical “–that needs you”. Places that need you will need a lot of work. That is why they need someone like you that is willing to do a lot of frustrating and unappreciated work (because you care about the place and the people in the place. Swell places with high barriers to entry don’t need you.
If rents are low, you may need to limit yourself to picking up trash and doing careful serviceable rehabs like the cottage shown above. Don’t forget that the project is the neighborhood not just the building. That little garage has been rented since Dan Camp renovated it 30 years ago as part of his effort to transform a part of town nobody cared about.
Be disciplined in what you are willing to spend in total project costs. If rents are low or high, you still need to limit your project costs to what can be supported with the likely rents.
Do not expect to be welcomed or appreciated. Keep your head down. Under-promise and over-deliver. If you are a developer it will be hard to build trust in a place where people doubt or casually mischaracterize your motivation and methods. Do the work anyway. Any recognition or support you see from your neighbors along the way is a bonus. Take the long view and outlast critics who don’t have anything resembling a genius plan of their own. Be smart. Run the numbers on multiple projects before you launch. Start small. Find and support local champions and colleagues. Few resources are as important as Stubborn Hustle in a person hungry to learn their craft.
If you are passing through Bryan, Texas, look up Ryan Terry and have him show you his project on the edge of the downtown. He is walking the talk.
I am currently reading The Advantage by Patrick Lencioni. Lencioni is the author of Death by Meeting, a favorite of mine. The Advantage is about organizational health, something worth considering for any small developer.
You may have zero employees, but your work will require that you cultivate a real organization to have a stable enterprise. The organization may be populated by freelancers, brokers, consultants, architects, engineers, property managers, building trades, and investors, but you will need to built that organization/network intentionally. Building a healthy culture without a lot of drag and friction from dysfunction, politics, low morale, and low productivity is as much of a project as building/rebuilding a neighborhood. I look forward to other folk’s impressions of this book. The end of the year is a good time for reflection and big picture thinking.
I spent years in an outfit that started out with just enough structure and systems to design, entitle, engineer and build a cool project or two. With time, the head of the company figured out that he needed to intentionally build a company with a good culture and good systems/habits that happens to produce cool projects. The transition was rough, but the lessons of that enterprise, (now dramatically reduced by the Great Recession) have stayed with me as we explore potential business models for Small Developers.
Patrick Lencioni is onto something in focusing this book on organizational health. This book merits a weekend of reading and big picture thinking.
One of the themes I have seen following the recent election, is that many people are tired of being talked down to by people who seem to think they are better. Call it a backlash against smugness, for lack of a more precise term. Recently I proposed that for people trying to build better places, the alternative to smugness would be to become authentic assholes. I am serious on this point. Authenticity appears to be the quality that lets you get a partial pass on being an asshole, as long as you don’t talk down to people..
I’m directing this approach to the Architects, Engineers, Planners, Policy Folks, and Academics who are members of the Congress for the New Urbanism or similar place making advocacy groups. If being the fancy people who know stuff, (the people perceived as smug or condescending) is not working, then let’s not be those people. Let’s be authentic assholes.
The fire marshal’s mandate is not a collection of sincere feelings that we should help the community process through group hugs. It’s bullshit that hurts the town. Some asshole needs to call the fire marshall out for being part of a calcified over-reach that makes no sense.
Off-Street Parking minimums? More bullshit that needs to be called out. Municipalities completely suck at guessing how much parking is going to be needed for all possible land uses, and the community was wrong to give them that job. The result was they picked numbers that produced fewer complaints and phone calls. Some asshole needs to call out that lazy bullshit in stark terms and poison the well. Make the position of advocating for such nonsense so awful that anyone who defends parking minimums (or maximums) is discredited for being a lazy bullshitter.
You want to make a difference at the local or regional level? Become a developer or a builder. Free yourself from the shackles of propriety and elaborate argument. Every community needs people who can build and rebuild the place. That’s where we can find our place in the moral, economic, and cultural fabric of a place. Architects, Engineers, Planners, Academics have a professional obligation to at least appear to be interested in making the city a better place with ideas. People who are fearful see a host of horrible outcomes, real or imagined, when ideas are advanced in clumsy ways disconnected from the base concerns of daily life. Developers and builders are not burdened with those expectations and when the dust clears there are buildings built or rebuilt, people find benefit in the buildings or they don’t. (–Keep in mind that the bar for a decent building or street is quite low many places). Nobody expects virtue from a developer. They may look to exact virtuous action from the developer under duress, but they really do not expect it as a natural expression of what is in the developer’s greasy soul. An exaction or tax is often given reluctantly, out of resignation. An unexpected gift can be a sincere expression of our better nature.
This is a framing thing. When New Urbanists propose a better place that starts to sound like some kind of utopia and the built effort that follows only delivers 68% utopia, folks get disappointed and pissed off because their high expectations (however unreasonable) have not been met. If a developer commits to meet all local codes and regulations and to deliver something the market seems to want and the built result is 32% utopia, people are accepting and sometimes even happy, because their low expectations have been exceeded.
Be virtuous in your heart, but don’t wear it on your sleeve. Be cunning and deliberate. Have a plan for your neighborhood. Gather resources that others cannot access. If we can be the people who actually get stuff built during a recession (And that stuff doesn’t suck), if we can build well, despite the severe shortage of skilled construction labor, who is going to mess with us at the local level?
If you would like a glimpse of what an insurgency of Small and determined developers might look like, wander over to the Small Developer/Builders Group on Facebook and see what those folks are talking about. We worked to keep the group fairly politics-free. If you are not on Facebook, find somebody who is and they can guide you. Come to a Small Developer Workshop where you will meet folks who are serious about making a difference in their neighborhoods (even if other people think they are assholes).
Nobody suspects virtue in a developer. You can pick the opportunity to surprise them. Under-promise and then over-deliver.
I think there are lots of great precedents for small single story main street buildings that work well. Above are some studies David Kim and Will Dowdy did on small, shallow storefront spaces that could be used as parking lot liners or in conjunction with small apartment buildings and cottage courts located behind the small commercial/flex building to provide mixed use without requiring the use of commercial steel pipe fire sprinklers that can be required if the residential and non-residential Occupancy Types were combined into in one mixed use building.
The intent was provide a wide/shallow space that could be flexible. We settled on a depth of 26′ as this leaves an 18′ dimension between the 8 x 8 accessible restroom and the storefront. We were also looking to keep any columns or other intermediate structure out of the floor plan and 20′-32′ of depth is readily spanned without going nuts on the truss design. You can get pre-engineered bar joists at 40′ long, but we wanted to keep the construction technique within the skills of residential trades.
Keeping the depth modest allows for daylighting of the space from a transom and light shelf over the storefront and awning. Spaces this small are easily heated and cooled with a ductless mini-split heat pump/air conditioner.
Using a single pitch roof truss, sloping from the street side to the rear, with a parapet on the street side can provide lots of room for signage, while screening compressors or kitchen hood fans from the street view.
Buildings that are flexible enough to house small and inexpensive workspace for retail, services, food and drink, etc. should be in the Small Developer’s tool box. You may know an under-utilized parking lot that could be lined with something like this. Could be good way to follow up on testing the location with some food carts.
Steve Mouzon has some very interesting thoughts along these lines. His blog has better production values than mine does, so I encourage you to click through and check it out. Steve Mouzon’s Blog Original Green
I continue to ask Urbanists “why aren’t you a developer yet?” That’s a sincere and serious question. I am serious about recruiting Architects, planners, engineers, activists who consider themselves to be urbanists (New or otherwise) into the ranks of the small developer cohort because I think it is the best way for an urbanist to have an impact in a place they care about. If you have devoted thousand of hours of study and practice to what makes a good place, why leave the construction and renovation of buildings to developers? This question becomes a bit more pointed when you recognize that many conventional developers are doing work in urban settings under duress or without much of a clue how to make their efforts fit a more urban context. I think the typical generalist/urbanist will do a better job than whatever big development outfits are working in their city.
While Urbanists are working to heal the city or build better places, they should hang onto some of the buildings that get built/rebuilt along the way. Having a modest portfolio of buildings that pay rent will help them weather the next recession. (It is really hard to make a living doing fee for service or consulting work when nothing is getting built).
With those reasons in mind, we still need to have a sober and realistic grasp of what is involved for someone making a transition to become a developer, given the arena they are likely to operate in. This stuff ain’t easy.
People tend to think that all real estate developers make a ton of money, because some developers have. For every major league star in the real estate game there are scores of people hustling to make a living by making their neighborhood better. Lots of people are fooled by the guy in the nice suit driving a very nice leased vehicle.
I don’t know how people arrive at the amount of money they assume is made on a development project. The assumptions may be ridiculous, but until somebody actually goes through the process, it is not reasonable to expect them to know the math.
I also recognize that until you can demonstrate otherwise, a new developer is part of a disgraced enterprise. So folks considering taking up this work should not expect thanks or regard. Start small. Hustle on a small project will help you acquire the know how and relationships that will make larger or more complex projects possible, but hustle will only take you so far and you don’t want to get into a project that will turn you into a former developer because it is too big or complicated.
I got an email from an Architect in Florida looking to get started as a small developer. She wanted to know how to pick a property to get her new enterprise started. We always recommend that you think beyond the individual building and commit to the neighborhood as your project. Stake out a geographic area as your “farm” the piece of town that you are going to know better than anyone else. If you cultivate that farm, meet people, build trust with your neighbors and the folks who might oppose new construction , you have an edge that a big operator from out of town will not have.
Where should you look for your Farm? No, I am not talking about an actual agricultural farm. “Farm” is a metaphor for a neighborhood you are serious about cultivating long term. Pick a place that you care about, that needs you. For example, I really care about my old neighborhood; Prospect Park in Brooklyn -but Prospect Park, along with the rest of Brooklyn is booming. So that place does not need me. Find a place in between where cool stuff is already happening and where things are still kinda lousy. Work the seam. If you can find a piece of a neighborhood that is on the seam between the two, you can have a significant impact and have real upside for the value of the buildings you build or renovate.
Look for an area with multiple buildings to renovate and repurpose, or multiple vacant parcels to build new infill buildings on. Map out your various opportunities, which properties are listed for sale. For properties that are off the market, you dig into the local county assessor or recorder’s office records to learn when the property last changed hands, are there any liens filed against the property, and who is the owner of record. Sometime the County Assessor records are available online, but even if you use the online resource, go down the the assessors office and meet some people. Learn how your local operation works. Print out some physical maps to mark up as you walk or bike around your farm.
Commit to your farm. Buy a house in your farm, renovate it, and live there. Look for something you might divide into a duplex or perhaps a small existing mixed use building where you could live in one unit rent-free while figuring out your farm. Once you become familiar with what your likely rents, likely hard and soft costs to build or renovate might be you will be able to evaluate multiple properties and rank them for which ones you want to pursue first. Working the project(s) on paper is the best way to get started. There is no risk other than your time and attention.
Get out and meet people. Walk around. Put your self in a place where you are likely to have some chance meetings, the farmers market, a coffee house, a neighborhood bar, a hardware store, a church, a community meeting, anywhere that helps you meet people who live and work within your farm.
I tend to let too many files accumulate on my computer desktop. As I was clearing out files today I came across the photo above and the text below. As you can see from the photo, we did manage to put on the first boot camp in Duncanville. By the end of 2015 we had done six bootcamps and workshops and launched non-profit to coordinate the effort to cultivate Small Developers around the US, the Incremental Development Alliance (IDA). Next Tuesday, June 7th in Hamtramck, Michigan we will running the 7th event of 2016 the day before the 24th gathering of the Congress of the New Urbanism starts up on June 8th.
In addition to running the one day and three day training events, IDA along with Midtown, Inc has been awarded a Knight Foundation grant to do a deeper diver into the Midtown neighborhoods of Columbus Georgia, providing 18 months of extended training and mentoring for local small developers.
None of this would have been possible without the hustle and hard work of local sponsors and volunteers in each of the cities that hosted us and the ongoing efforts of the IDA staff and board. Strong Towns helped us get started, hosting the boot camp registration for the first couple events on their website. Lynn Richards and the staff at CNU have been tremendously supportive as we continue to figure out how to scale up the Small/Incremental Development Effort. The CNU’s Project for Lean Urbanism was the genesis of this entire effort. The time we spent with the Lean Urbanism Working Group exploring what it would take to Make Small Possible made it very clear that we need a new business model for development, That shifting the scale of the development enterprise was going to be critical to building better places. Thank you everyone.
June 5, 2015
Things are moving FAST with the rapidly expanding Small Developer/Builders Facebook group that we set up last April prior to CNU 23 in Dallas.
I have heard from a number of group members via email and phone calls that they would be interested in a hands-on workshop on basic skills needed as a small developer builder. There is an effort percolating to hold a one day workshop for Small Builders in Atlanta the day before the National Town Builders Association (NTBA) Fall Roundtable October 16-18.
But that’s all the way into late October and folks are pressing for something much sooner.
I think we can put this together in the Dallas area rather inexpensively. If the folks attending cover their own travel, lodging and meals, if we can find a venue at modest cost. It could be a very Lean affair. A meet-up with other folks considering or practicing as Small Developer/Builders. Connect with some mentors, roll up our sleeves and get some skills.
Here’s what we are thinking for content:
BUILDING FOR-RENT VS. BUILDING FOR SALE PROJECTS.
HOW TO DO BASIC MARKET RESEARCH.
PRO FORMA BASICS, SORTING OUT YOUR DEAL ON PAPER.
HOW TO BUDGET FOR HARD AND SOFT COSTS.
OPERATING EXPENSE BUDGETS AND THE PROPERTY MANAGEMENT BASICS.
SITE SELECTION – EVALUATE SEVERAL SITES TO FIND THE BEST ONE TO START ON.
HOW YOUR FINANCING REQUEST LOOKS TO YOUR BANKER.
NAVIGATING THE APPRAISAL PROCESS.
HOW TO PITCH A DEAL TO AN INVESTOR.
DEAL STRUCTURES; ALIGNING THE INTERESTS OF PARTNERS.
POP-UP RETAIL AND STREET MARKETS; HOW TO CULTIVATE TENANTS (WHEN YOU HAVE NO MONEY).
UNDERSTANDING FHA LOAN PROGRAMS 203(B) AND 203(K) FOR 4 UNIT PROJECTS.
DEALING WITH CONSTRUCTION IF YOU DON’T HAVE A CONSTRUCTION BACKGROUND (AND EVEN IF YOU DO).
COMMON SENSE DESIGN STRATEGIES AND WORKING WITH ARCHITECTS AND ENGINEERS.
MULTIPLE ON-RAMPS, SCENARIOS FOR HOW TO GET STARTED AS A DEVELOPER/BUILDER.
A STANDARD 4-PLEX DEAL; ALL RESIDENTIAL OR SMALL MIXED USE BUILDING.
A STANDARD COTTAGE COURT DEAL.
What other content should we cover?
We are thinking folks would arrive in time for food and drink on Friday evening, leave after lunch on Sunday. We are doing this on August 14-16, Who’s in?