Episode 018

Architect as Developer and His First Project, the Fancy Lofts with Matthew Segal

Enoch SearsAug 8, 2013

Matthew Segal, a young designer 3 years out of architecture school, designed, developed and built his first project, the Fancy Lofts. Sited in San Diego, the 4-unit residential project is an adaptive re-use of an existing U.S. Post Office.
Fancy Lofts by Matthew Segal
Modern Loft Interior Matthew Segal
Fancy Lofts Floor Plan Matthew Segal
Fancy Lofts Exterior
Fancy Lofts Matthew Segal Interior Exterior
Matthew Segal Fancy Lofts Exterior Parking

After being raised by and working for his father, prominent architect as developer Jonathan Segal FAIA, Matthew pulled off his first development project.

In this interview with Matthew Segal we discuss:

  1. The concept of architect as developer
  2. How he got the financing to build his first project, the Fancy Lofts
  3. Lessons he learned from the design, build, develop process
  4. Suggestions for architects who are looking to design and develop their own projects

This interview is on iTunes. Subscribe above, and be a hero! If you know another architect who would benefit from watching this video, share away using the social share buttons.

Show Notes:

  1. Matthew Segal and his latest project on this UT San Diego article by Roger Showley
  2. Website of Matthew's project, The Fancy Lofts

Interview Transcript and Members Only Resources:

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Enoch: Hey, everybody. Welcome back to Business of Architecture. This is Enoch. Today, we’re joined again by Matthew Segal. He’s the COO of Jonathan Segal Architect, working in San Diego, California. Matthew Segal just recently completed his own development project. He works for a firm that does integrated design-build and architecture, and he actually has a project that he developed, I guess, on the side? Matthew?

Matthew: Yeah, on the side.

Enoch: Yeah. So, first of all, welcome back to the show. We look forward to talking with you about the project that you developed.

Matthew: Thank you. It’s great to be back on.

Enoch: So, tell us about this project. Give us a little overview of what it is and where it’s at.

Matthew: It’s a 1950’s building that used to be a post office in Golden Hill, San Diego, just east of downtown. I converted the existing building to three units, and then I added the unit out back over parking.

Enoch: Okay. You’ve been out of school for how long?

Matthew: I think it just came up on three years.

Enoch: Okay. How long have you known that you wanted to do your own development project?

Matthew: I wanted to do it when I was in college, but combining that with school and play was a little bit more difficult than I expected.

Enoch: Okay. Then, during the looking process, how many other properties did you look at before you finally homed in on this one? What’s that process like?

Matthew: You know, one of my dad’s closest friends told me that he wakes up every morning and looks on LoopNet. I started doing that, and that actually helped a lot. There was a property I was looking at in the neighborhood that had been for sale for some obscene amount – I’m going to say, twice of what I paid for it. The lady sat on it, nobody made any offers. Then, she dropped the price 30%, and still no offers. She dropped it another 10% or 15%, then the offers came in floods. So, I was able to secure that property that I was actually probably looking at for a year and a half or so.

Enoch: Okay. Do you remember any of the other products you looked at and, sort of, passed on, and what that process was like?

Matthew: Yeah. I looked at a couple of pieces of dirt. I looked at, possibly, just rehabbing some existing buildings like six-unit, little bungalow, etc. But, for me, to qualify for that dollar amount, it starts to get too high. Even though I had my dad cosign on my building, there’s a certain threshold where I just didn’t feel comfortable with the financial obligation.

Enoch: So, we’re those other projects significantly greater in terms of scope?

Matthew: Yeah. They probably have been more like six or eight units instead of four.

Enoch: Gotcha. Now, I believe – and correct me if I’m wrong – before you do a project, can you do an FHA loan?

Matthew: You can. You can do one to four units with an FHA loan.

Enoch: Okay. Is that a good deal?

Matthew: You know I didn’t actually end up doing it. I got an ordinary construction loan. From what I understand, it’s a fantastic deal. It’s a lot of paperwork, a lot of front-loading everything. Then, you can only have so many draws. So, just understand the specifics of that. One of my father’s friends actually did that on a project and it worked out great for them. Although, some of the contractors got frustrated because the architect-developer didn’t have the ability to take out the money and pay them as frequently as somebody with a normal construction loan where you essentially have unlimited draws and you just pay for them each time.

Enoch: So, they were waiting for their money for longer periods of time.

Matthew: Correct. I think, possibly, you only get four draws.

Enoch: Okay.

Matthew: Actually, I think, on my project only took three draws just because I didn’t want to pay for it, and I was able to money borrow money, etc. But, just be careful.

Enoch: We have to apologize for our viewers who are overseas or in other countries where the laws and the lending environment might be different. But, if you’re listening to this, pipe in on the podcast page and tell us if you have any equivalent loans to this in your country. Like, I wonder in the U.K, or Australia, South Africa what kind of loans they have that are similar to the FHA. With that said, Matthew, give us a little background of what you understand the FHA is and some of the advantages why someone might want to use one of those if they are in the U.S.

Matthew: Well, from what I understand, the FHA is a loan you can put as little as 3.5% down. Essentially, it’s the government wanting to instill redevelopment of neighborhoods. So, you’re allowed to buy up to four-unit project or buy a one unit project and up to three units to that. It’s based on area. So, I think, in my area with a four-unit project, I can get a loan of $1.3 or $1.2 million. I don’t remember exactly, but one unit, two units, three units, and four units are based on the cost of living and certain frameworks that the government sets in those neighborhoods. So, every zone has a different dollar amount. Just be aware of that if you are looking at that.

Enoch: Okay. That sounds pretty incredible – 3% versus… For a conventional loan, what’s the going rate for the down payment?

Matthew: I think I ended up putting 25% or 30% down.

Enoch: Yeah, 20% to 30%. So, that would be…

Matthew: Go ahead, sorry.

Enoch: No, the lingo – LTV, right? So 70/30?

Matthew: Yeah. Maybe closer to 60% depending on who your bank is.

Enoch: Yeah, exactly. So, you were looking on the net, you saw some of these other projects that were too much. This one, you’ve been watching it for awhile, and you said that she started out high with the price.

Matthew: Yeah.

Enoch: And you had seen it dropped. So, in your mind you’re thinking, “This is getting sweeter. I’m going to keep my eye on this.”

Matthew: Yeah, and it finally got sweet enough where it, sort of, made sense. At that point, I called the brokers on the property and talked to them about. I said, “What does it take to buy this building?” and he said X, but she wants a quick close. I think because I offered that quick close – I think it was a fifteen-day look and a thirty-day close, or fifteen/fifteen, I can’t remember exactly right now – I won the property. I think her backup offer was maybe $5,000 – $10,000 higher, and it was a sixty-day look and a thirty-day close. She was an elderly lady. I think she was ninety-two years old. Actually, the day I was supposed to close, escrow, nobody could find her, and they were concerned that she actually passed away.

Enoch: That’s a great story.

Matthew: Yeah. It’s pretty interesting. They didn’t really know what they were going to do if that had happened, but she finally called in. She had actually been at her vacation home in Palm Springs.

Enoch: Man, that is an active ninety-two year old woman.

Matthew: Yeah.

Enoch: I hope when I’m ninety-two I’m in Palm Springs.

Matthew: Yeah.

Enoch: So, that’s the day of the close?

Matthew: That was the day of the close, yeah.

Enoch: So, was that a little stressful? They can’t locate the owner, you’re thinking, “Oh, great. We’ve got to get these papers signed.”

Matthew: Yeah, I was a little stressed. I can’t remember exactly the logistics, but there was a way to actually close if we needed to.

Enoch: Okay.

Matthew: I guess it transfers to her daughter or her son immediately, or however that works.

Enoch: Okay. Now, what kind of knowledge did you have in your head understanding the value of the property to know what you wanted to pay for it? What is that process like – of penciling it out and figuring out, “Okay, this is the value. This is what I want to pay for this and offer for this project”?

Matthew: Well, basically, my dad has trained me to, first of all, look at the parking situation. Determine the maximum parking because that’s really the deciding factor on how many units you can have on the property, regardless of whether or not that’s feasible. You go backwards from the parking. So, I determine the maximum parking based on maximum parking and the unit aggregation. Four or three bedrooms were the most cost-effective, profitable manner to park in to the house at site.

Enoch: So, when you say “parking…” Let me just rephrase what you’re talking about. I mean, it sounds simple. I just want to make sure I have it straight. How many cars can fit in the site without having part of the building or something?

Matthew: Correct.

Enoch: Looking where the drive approach is, and try to figure out how the cars sit on the site.

Matthew: Yeah, in this instance. I mean, regardless of whether it’s a rehab of an existing building or new property – it always starts with the parking in our firm.

Enoch: Okay. So, with this new project, what did you discover about the parking? How many cars could they park and how many were required for the unit mix?

Matthew: It’s in a transit zone which gives you reduction, but it was 2.0 per a three-bedroom. I had eight parking spots, all tandems; thankfully because it’s a transit zone. So, eight locations and four slots, if that make sense.

Enoch: Yeah.

Matthew: Those actually tuck under the building in the rear, [inaudible 00:34:24] design.

Enoch: Okay. So, “tandem” is one car in front of the other, correct? You basically have four spaces 40 ft deep, or what’s the size of those?

Matthew: 36 ft.

Enoch: 36 ft?

Matthew: Yup.

Enoch: Okay. Since we’re talking about the parking now, walk us through the project. What does it look like? I’ll splice in the photos. So, talk to us about the building, about the project.

Matthew: Yeah. So, basically because of the parking and the existing envelope of the building, I built a three-bedroom unit that was raised off the ground out back. I maintained the rear loading dock as, sort of, an entryway to the back two units. I try to utilize as much of the existing building as possible. Essentially, it’s an existing building shell with a cross inside to divide up the rooms or a T inside. At the front there’s a unit, a three-bedroom. Then, at the back to the north and south are also three-bedrooms with little courtyards, and there was [cutting end 00:35:26] of the roof. If you look on FancyLofts.com there are floor plans if you’re interested too.

Enoch: Awesome. What interesting design things did you do to add some value to those spaces?

Matthew: Adding some value cost a lot of money. I added patios which ended up necessitating cutting off the brand new roof of the building, adding straps, and basically having to retrofit seismically the building because of this design decision. So, the benefit was definitely there. I made the units fantastic inside, but the cost of it was very expensive.

Enoch: Do you think it was worth it?

Matthew: I think so, yeah. The units would have been bigger interior space-wise in the back, but I don’t think they were to have the same volume feel, and people use their patios too. One of the tenants actually strung Christmas lights. The volumes, I think, of the patios are 12 x 11, and the roof line is 13 ft to 15 ft in the air. So, you get this nice, vertical volume that the sky is framed by it. So, it’s really nice and allows you to have private space too.

Enoch: Awesome. So, if you wouldn’t have cut out those patios, would you then have been okay just leaving the buildings as is and not having to seismically retro-fit it?

Matthew: For the most part, yeah. It would have probably saved me $50,000.

Enoch: Wow, okay. Well, take me back to the process. You talked about talking to the broker, he said, “Hey, listen, it’s got to be a fast close.” You put in your offer, she accepted your offer. You’re scrambling. I mean, that’s an extremely fast close. What did you have to get down in that time period to close the deal?

Matthew: I had to have a bank loan. I had to have investors, which happen to be family and friends – fantastic coincidence that they were interested in investing with me, somebody just graduated from college. They were promissory notes; they didn’t have any ties to anything that I own, or my parents own, or anybody else. I had to have a design scheme, a pro forma, a Phase I, which is basically the historic loan analysis of the site and any issues. A title report to make sure that the title is clean. In this instance, because it was an existing building, I had to have a hazmat survey to determine what was toxic – lead, etc. I think that encapsulates everything.

Enoch: Okay. What was the hardest of all those things, from your perspective?

Matthew: I think the biggest learning process was the bank loan.

Enoch: Yeah.

Matthew: I was very, very scared that it wasn’t going to get done in time. The banker, although it worked out very well, was very difficult to, sort of, tie down a real date.

Enoch: Yeah. That sounds hairy, especially if you have such a quick close.

Matthew: Yeah.

Enoch: So, tell me where you got the money from. Give us an idea of how much of your own, personal money you used, how you got that money, and how you structured the deal just to pull all these together and incentivize investors to come on board.

Matthew: Yeah. I borrowed [Inaudible 00:38:35] numbers. It’s been a while and I’m a little tired, but I think, I put in $60,000 of my own money, which I made conveniently on Apple stock. I borrowed $240,000 from two people – $130,000 from one, and $110,000 from the other. Is that right? I can’t remember now, to be honest. It’s all blurred – the three numbers in my head. Sorry… $150,000 and $110,000, so $260,000 I borrowed.

Enoch: Okay.

Matthew: I gave them a point to sign up, and then 10% annual interest. Then, I got a bank loan for $690,000.

Enoch: Okay. Then, you had also had a co-signer on the loan.

Matthew: Correct – on the bank loan.

Enoch: Yeah, on the bank loan. Was there a personal guarantee on that loan?

Matthew: You know, I think, my dad may have had to sign a personal guarantee, sort of, as a recourse loan.

Enoch: So, just to rephrase: I guess the structure of the deal is that you’re acting as the developer. You have one investor which I guess could be considered your father, who is the co-signer on the loan. Then, you had two other investors that came in with money/equity in the project.

Matthew: Correct.

Enoch: Does that, kind of, sum up the deal, the structure?

Matthew: Yeah.

Enoch: Is that how you pulled it off?

Matthew: Yup.

Enoch: Okay. Now, you said you learned a lot about the loan process. What was the, sort of, déjà vu moments that you got from going through that?

Matthew: It was complicated because the time period was so short. Then, it was also a little strange because I essentially got a land loan that converted in to a construction loan. Then, they wouldn’t give me the construction loan until I had a city permit to build. So, back to what we talked previously about having a license. It took me a month to find somebody that could stamp the drawings for me. That was a month that I was paying interest on the property with no income, obviously. So, there were some interesting aspects of that, and getting insurance, and making sure everything was ready to go.

Enoch: Okay. So, you went in to this project, and you have this idea of how much it’s going to cost, you had your project. There was one gotcha that you mentioned, which was the realization that with a three-storey building you needed an architect to be responsible for the project.

Matthew: That was in the final round of comments. So, it was even worse. She caught it in the end, the structural reviewer. I was so frustrated. I couldn’t believe it.

Enoch: Horrible.

Matthew: Yeah.

Enoch: Well, what other gotchas? Do you remember any other, sort of, unexpected things that came up?

Matthew: Yeah. You know that now that I noticed I always look for these stuff: There happened to be SDG&E power line that ran over my property in the alley. Unfortunately, I didn’t take that in to account when I designed my building. Had I known that before, I would have designed a little bit differently to accommodate that. It had cost me$7,000 to move that power line, and it took SDG&E about three and a half hours to do the work. They charged me $7,000. It was really nice.

Enoch: Yeah. I heard being a lineman is a good job, just as a side note.

Matthew: Yeah. I’d love to sign up for that.

Enoch: So, is that where the three-storey unit is, in the back at the parking? Where is that line?

Matthew: That was at the back, over the parking area.

Enoch: Okay. So, you paid $7,000 to move that.

Matthew: Yeah.

Enoch: Then, you talked about having to do some structural retrofit and to the building. Did you have that cost factored in or was that, sort of, like, “Oh, man…”?

Matthew: That was a surprise too. Basically, I’m used to budgeting on larger projects. This is a surprise. When you have a larger project, you are able to, sort of, defer these costs over more units like a twenty-seven-unit project. The water meter for instance. I didn’t realize I have to buy new water meter. Mine was a three quarter inch; I needed a one inch because of the fire service. So, I ended up paying, I think, it was in the neighborhood of $20,000 for a water meter and water credit units, etc. So, that was a surprise. So, when you divide it over four units, $5,000 a unit, it adds up really quickly. But, if you divide it over twenty-seven, it’s nominal.

Enoch: Yeah. That $20,000 hickey.

Matthew: Yeah. So, I was definitely way over budget. But, I think the product turned out pretty nice in the end.

Enoch: Okay. Now, how did that affect the loan? Did you have any contingency built in to the loan? What would you recommend other architects do that want to go this route in terms of the amount of loan they should take out?

Matthew: I was beyond my loan. I was able to use my credit cards to, sort of, float things in the process. That’s one of the biggest things I recommend. Plus, I have frequent flyer miles to fly around the world twice now. But, make sure your credit line on your credit card is big enough because that buys you an extra sixty days. I paid them off every month. So, it’s fantastic. It’s basically free money for thirty days – really sixty days because you’re able to put out the bill another thirty. So, credit cards are fantastic. What else?

Enoch: Well, speaking of the credit card how does that work? Who pays it off? Where does the money come from to pay off the credit cards?

Matthew: Well, I have investment from those two investors and my own money. I had a fluff there of, I think, around a $100,000 that I would draw out of. That would get me to the next bank draw. So, I really, basically, pushed all my overdues to the very last minute. I had to take out one more loan at the end because I had to pay people off because that period was just short. Between when I was anticipating getting my permanent financing, I ended up selling. But, when I was just thinking of getting my permanent financing, I had a one to two-month period with another loan of $70,000 roughly at 10%. So, it was a nominal fee to actually carry all those people and get all my subs paid.

Enoch: Okay. So, that loan was because you’re over budget to make up the difference?

Matthew: Yeah, exactly.

Enoch: Okay. Then, what did that loan look like? Was that a personal loan?

Matthew: Yeah. I borrowed from my parents and my sister.

Enoch: Oh, nice.

Matthew: I probably could have gone back to my investors and asked for more money, but I didn’t want to scare them.

Enoch: Yeah. Man, there is some serious love in that family.

Matthew: There’s a lot of love – probably too much. They wanted the interest immediately after though, let me tell you.

Enoch: Did they get the bookies on you?

Matthew: Yeah, pretty much.

Enoch: Nice. What did you offer them? You said 10%.

Matthew: Same, exact terms that I had with my other investors.

Enoch: 10%, okay.

Matthew: I probably could have called other people if I needed to, but I need the money quick.

Enoch: Okay. What lesson did you learn from building the project?

Matthew: You really need to be there the whole time. I was working for my dad probably four to six hours a day, and at my job four to eight hours a day, and vice versa. I was burning myself out and I wasn’t catching things that I should have been catching. So, I definitely recommend either you somehow are financially solvent enough to be able to be there full time, or really understand that you’re going to be diminishing your capability to catch things on one or the other job.

Enoch: Okay. When you say “catch things,” what kind of things that were worrisome to you that you found?

Matthew: You know, missing hold downs, missing fire caulking, things like that. One of the bedrooms was framed wrong. I should have caught it. Immediately after they framed it, I walked in and, “Oh, this is way off. This wall should have been a foot and half in the other direction.” I was able to, sort of, adapt it and make it work because it would have been a ton of work for them to take it out. That’s where the relationship would be developed. They take care of you and you take care of them. So, in those instances, I didn’t make the framer move the wall. That would have probably been two days worth of work.

Enoch: Alright. So, be there as much as you can.

Matthew: Yeah.

Enoch: What other insights can you share about building a project?

Matthew: I just think walking it at least twice a day, really understanding what you’re doing. In my position, I was able to change things just as my dad taught me. So, as the building was progressing, I was changing things. I noticed that one of the walls wasn’t designed correctly by the engineer, or it was correct but they had too much deflection. So, I paid an extra $1,000 or $1,500 for the framer to put a post or a beam across it, so that this two-storey wall in the back unit wasn’t flexing almost an inch.

Enoch: Wow. So, is that stucco portion finished on that?

Matthew: That was actually the metal. So, it wouldn’t have mattered too much, but dry wall probably would have been cracking on the inside.

Enoch: Okay. Now, tell me about the finish that you used, and the window wall systems. What did you find out? Did you find any good deals on stuff or do anything creative there?

Matthew: Yeah. It’s interesting. When you start to look at the cost of everything… A window wall or a storefront system probably cost, at least in San Diego, in the neighborhood of $16 to $22 per sq ft. Stucco was probably $4 to $6 per sq ft, maybe closer to $7 when you include the plywood that we typically put underneath it. You start to have these cost-benefit analyses where you say, “Okay. Maybe it’s better if I eliminate the stucco there and put a window on it instead,” or things like that. Sometimes you realize that the cost to change some of these things is so nominal and the benefit is so great that it’s a simple decision.

Enoch: Nice. So, you might say, “Okay. It might be $5,000 more to stick in a window wall system here, shoot, it’s going to add to the space.”

Matthew: Correct. In the front of the building, the post office used to have this 4 ft wall that ran across with a storefront above it. I was standing there and I happen to have a vodka on the site that day, and my saw cutter guy was there that day too. Just coincidence, all the stars aligned. My window guy came up and he said, “You know, it would be easier for me if you just knock that wall out and I ran floor to ceiling glass.” I said, “Great. What’s it going to cost?” Nothing. It’ll save me a ton of time. I said, “Perfect.” Got the Bobcat, drove over, my sawcutter saw and cut the left side, pulled the wall out, dumped it on my trailer, my guys took it to the dump, and the window wall went floor to ceiling; huge difference in the space too.

Enoch: Awesome. So, originally that was just going to be a partial window.

Matthew: Correct. Probably got a 6 ft window instead of a 10 ft window.

Enoch: Okay. Wow.

Matthew: Yeah.

Enoch: That’s incredible.

Matthew: That’s the kind of decision we can make without having to call the client, call the architect, call the contractor, and make some change order to necessitate that.

Enoch: Yeah.

Matthew: I just, literally, hopped in the Bobcat and bulldozed the wall, and he installed the window ten minutes later.

Enoch: Nice. Now, I know you were thinking about living in the project originally.

Matthew: Yeah.

Enoch: Did you ever do that?

Matthew: No, I never actually did. To get an FHA loan, you have to actually be an occupant on the property. So, that was my intention in the event that I was going to get an FHA loan, but I didn’t. I ended up selling the property because I couldn’t get the FHA loan, and I couldn’t get a conventional loan either.

Enoch: Okay. Tell us about the close off process, then. Tell us about what happened there when the project was finishing up and your exit.

Matthew: Yeah. So, basically, the project’s value based on an income stream, which is rental income, was far greater than any comparables in the neighborhood. So, my building that should be worth somewhere between $1.5 and 1.7 million based on the incredible rents that I got was actually appraised at a $1 million and $1.1 million. So, that really hurt me on the takeout loan. Basically, it wasn’t feasible to get a takeout loan because my cost has exceeded that.

Enoch: Let me pause you there for a second. What were the comparable rents in that area that they were looking at?

Matthew: The rents were similar, but because it was a one to four-unit project, they don’t base it on rent – they base it only on comparables.

Enoch: Oh, okay. So, actual sales of other buildings.

Matthew: It’s a residential loan instead of a commercial loan at that point. If you have five units and greater, it’s a commercial loan. They’ll base it on a combination of comparables and income stream, but primarily income stream.

Enoch: Okay. On the flipside, with your project they based it strictly on…?

Matthew: Neighborhood comparables.

Enoch: Okay. How many other buildings had sold in the past year or two, probably last year?

Matthew: Basically, nothing that was getting those rents that I was getting. They’re all, sort of, like duplex houses, etc, in the neighborhood. So, there was nothing with the, kind of, special qualities in my building.

Enoch: Okay. Incredible. So, that appraisal came in, it was less, probably than the money you needed to get out of the product to pay off your investors and close the deal.

Matthew: Yeah. It was less than the cost of the project.

Enoch: Wow. You’re faced with this, what did you do?

Matthew: I was pretty frustrated. My only real option was either to take on a partner and have the cash down on the deal, or sell the building. I ended up selling the building. I made out well, really well. The buyer made out really well too. It was a quick close; it was a thirty-day close.

Enoch: Okay.

Matthew: I was, literally, just about to go to market when this person called me and told me they were interested in buying it.

Enoch: Nice. Okay. Tell me about the timeline when you decided, “Okay. We got this appraisal back. It’s way too low. We can’t do this. I want to sell the building.” What are the next steps that you’re taking to get that building on the market? What are you doing?

Matthew: I didn’t interview, but I contacted four brokers in San Diego that I felt were adequately capable of selling the project.

Enoch: What made them capable in our eyes?

Matthew: They know the neighborhood, they understand the product, and they have a history of selling buildings of the similar type – just a feeling in it. There are a lot of sleazy brokers out there. Fortunately, in the past few years, we found some incredible brokers that are really good people, and generally care about their clients, and their buyers and sellers.

Enoch: Okay. So, you identified these four brokers, called them up, asked them, and told them about the project.

Matthew: Yup. I just want to ask them what their feeling was, what did they think the value was with the rents. They all told me it was going to be difficult to sell because there was no comparables in the neighborhood. So, that would have to be almost a 100% cash buy, which I ended up selling to. They developed, sort of, a full market package, “Hey, this is what our feeling is.” I called all these people, I think, on a Monday. I told them I needed to know by Friday. By Wednesday I actually already picked somebody.

Enoch: Nice. So, assuming that person hadn’t come through to purchase the building, you’re talking to these guys, did they come back with any, sort of, prices that they thought they would want to list it at?

Matthew: Yeah. I think it was actually going to be listed $1.575 million.

Enoch: Okay. Were you comfortable with that?

Matthew: Yeah. I was very comfortable with that. My goal was to get somewhere in the $1.5 million neighborhood. I ended up selling it for $1.475 million as a concession because the buyers are fantastic people. We’ve actually purchased property from them in the past, and they were going to keep the building forever. I wanted to get somebody who actually cared rather than a large apartment company or something like that. These people really do care. They love the product. I honestly don’t think they’d ever sell the building.

Enoch: Okay. So, you’re getting ready to sell the building. Tell me how this person contacted you. How did they know about the project? Where did this come from – the purchaser that came in there? How did that happen?

Matthew: Coincidentally, I think, my dad had met with him the night before to talk about some other projects. It just came up in the conversation that this family friend of ours’ dad needed to place money. He had X-dollars and he needed to put it somewhere. My dad said, “Oh, you should buy the post office.” He said, “That’s a great idea. Get Matthew to send me everything. I’ll take a look at it tonight.” He did. Then, he called me the next day, he’s like, “We need to make this happen.” So, it was just progressing from there.

Enoch: How did they feel about the price you’re asking for the project?

Matthew: He, actually, is a big-time developer, works for [Inaudible 00:56:25] so he gets it, which was fantastic. He actually offered, I think, $1.525/$1.550 million. I can’t remember. I, again, as a concession brought it down to $1.475 million. When they got their appraisal, which came in extremely low, the dad was having some heartburn, some sceptics of what was actually going to be happening.

Enoch: Okay. So, the dad, from whom the money was coming from, was having some misgivings when he saw the low appraisal come in.

Matthew: Yeah. It’s, “Whoa! Why am I paying $400,000 more than the appraisal?” $1.475 million sounded a lot better to him than a $1.525 million.

Enoch: Okay. Who made the call to the father to explain that and, sort of, sell him on the deal?

Matthew: His son.

Enoch: Okay. Awesome.

Matthew: Yeah.

Enoch: I mean, the value of relationships, right?

Matthew: Yeah, definitely.

Enoch: Cool. Well, is there anything we left out about the Fancy Lofts, Matthew – about your experience developing that project?

Matthew: No. I haven’t done it yet, but I think it’s also important for architects to learn how to use a camera and photograph that work. It’s not that hard any more, and that’s something I haven’t had time to do. But, I’m hoping I’m going to do it in the next week or two.

Enoch: Awesome. You know, I’ve seen some of your work on Jonathan Segal’s website, I believe. Is that some of your work on there?

Matthew: Yeah. I pretty much photograph everything for our company now, or his company – excuse me.

Enoch: Awesome. Well, as a little parting gift, can you give us a couple of photography tips for do-it-yourselfers out there?

Matthew: Make sure you understand how to make a building parallel in the frame. It’s really important. A lot of people don’t understand that. It’s a very simple process, but I think that’s the most important architectural tip that I can give you.

Enoch: When you say “parallel,” do you mean up and down, that it’s not looking like it is diminishing.

Matthew: Correct. [Inaudible 00:58:20] in or out.

Enoch: I know they have special lenses to do that. Is that how you do it? How do you make it happen?

Matthew: No. I use a program called Lightroom, Adobe makes it. It’s very affordable and very simple to use, but a tilt-shift lens is typically expensive.

Enoch: Yeah. Gotcha. Okay. Well, Matthew, I look forward to introducing this project, having all the feedback, having all these listeners see the project, see what you did there, and look forward to the future. What’s next for you? Now you’ve exited the project, you made some money?

Matthew: Yeah.

Enoch: Okay. What’s next?

Matthew: Looking for property. It’s all too expensive right now. So, I keep checking Loop now hoping that something comes up. But, we’ll see.

Enoch: Okay. Excellent. Well, I hope when you find that new project and you move on to that, you’ll come back on this show, and we’d love to tell everyone what you’re doing and how that project’s going.

Matthew: Definitely, and a great show too. Really appreciate it.

Enoch: Good. Matthew, it’s been great having you.

Matthew: Take care, Enoch.

Enoch: Okay, thanks. You too. Bye-bye.[/DAP]

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Enoch Bartlett Sears is the founder of the Architect Business Institute, Business of Architecture and co-founder of the Architect Marketing Institute. He helps architects become category leaders in their market. Enoch hosts the #1 rated interview podcast for architects, the Business of Architecture Show where prominent guests like M. Arthur Gensler, Jr. and Thom Mayne share tips and strategies for success in architecture.


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