During my formal education at Texas A&M University from 1969 to 1973, one of our design professors told us that if we were interested in making a lot of money after college, we should seriously consider changing majors. I did not pay him much attention at the time; surviving the charrette-of-the-moment and passing my floriculture exam were quite enough to consider, thank you. Less than a year into my first job after graduation, however, I found myself on the unemployment line.

My first employer, a sole proprietor Landscape Architect, had to close his two room office and move in with a structural engineer down the hall. The continuing recession, brought about by the first oil embargo, eventually shut down his shared space as well. The structural engineer and the large, active architectural firm that subcontracted with my boss were further casualties in time.

This experience, while considerably more bitter than the Paul Samuelson economics I was required to take in college, was the beginning of my real-world education as a Landscape Architect. On the surface, it seemed that my professor had been right; at the moment, I was making NO money. Beneath the surface, however, I had learned two valuable lessons:

1. Never depend too heavily on just one client.


2. Try to recession-proof yourself, if possible.

A subsequent job in the local municipal planning department followed, and I thought that perhaps this situation would provide me with the stability I so desired?EUR??,,????'??+stability that would let me get on with practicing my profession. But, alas, it was not meant to be. I discovered that politics can sometimes determine your fate even if you do a good job, win promotions and receive positive ratings from a personnel management company hired to thin the ranks. This experience taught me my third economic lesson:

3. Never let others who do not even know you determine your fate.

I learned a fourth lesson by observing a well-known Landscape Architect who never made any of his trusted employees profit-sharing associates. They would work for him for a few years, then leave, never to return. When he died, the company was left to his family, who knew little about how to manage a landscape architectural office. Therefore:

4. Never expect to make financial progress by working for a one-man show.

Finally, I learned a fifth lesson by working for a consulting company whose only business was the selling of services. This job was in 1980, when the prime interest rate shot up to 21.5% and economic havoc again ensued.

5. Never depend on the selling of services as your only means of support.

College had prepared me to begin my career in landscape architecture, but it had not taught me how to sustain it or survive financially. Fortunately, my next job was with a small but diversified land planning/ engineering company, Hillcrest Associates, Inc., in Landenberg, Pennsylvania, which showed me not only what could be done on paper, but what could be done on the ground as well.

Hillcrest’s owner, Richard M. Longo, a professional engineer and registered architect, shared a financial interest with a former business partner in two residential land developments the two men had planned and engineered. They were limited partners in a 50-unit, single-family detached subdivision in which they offered their services to the general partnership in return for a share of the profits whenever lots were sold. Another project was wholly owned, designed, engineered, financed and construction-managed by a third partner. Both projects were sensitively planned, using techniques they would have sold to any other land developer. Here, in other words, was a consulting firm that acted as both developer and consultant.

It was natural that our first and only land investments have been residential subdivisions. Perhaps if we had an architectural specialization in restoring old buildings, we might have bought, rehabilitated and either leased or resold these types of properties

Soon after I joined the staff, Hillcrest Associates began concentrating on buying and developing land in the shadow of the DuPont family estates. The inherent benefits included rolling countryside, the lowest density in the county (no lots smaller than two acres), large, expensive houses, private schools, exclusive clubs and picturesque rural roads. In addition to selling services to regular clients, Hillcrest decided to use its in-house expertise to develop its own choice parcels.

But more than just money was made. The fact that we began to add one successful project after another helped to sell our services to clients who were shopping for the best consulting firm. These clients saw that if we could do it for ourselves, we could do it for them as well. Our consulting advice was strengthened by our “in-the-ground” examples. Following is a methodology that Hillcrest Associates has employed in evolving from a “services only” consulting company.

Create an ownership entity other than your consulting company.

It is wise for legal, and sometimes tax reasons, to create a partnership, corporation or some other ownership entity to buy and develop your own land. Hillcrest has never bought and developed land under that name, but rather through newly created entities. Consult your attorney and tax accountant.

Invest in what you do best for other clients.

The most frequently requested service we offer clients is high-quality residential land planning for subdivisions and land developments. This has become the firm’s “bread-and-butter” work; site evaluation and analysis, land planning, financial pro formas, plan processing through the appropriate government agencies, construction drawings and construction management.

Contrary to popular belief, banks can be surprisingly flexible in these situations. Do not be afraid to ask for an amount over your anticipated fixed costs

After our work on hundreds of properties since the company was founded in 1972, it was natural that our first and only land investments have been residential subdivisions. Perhaps if we had an architectural specialization in restoring old buildings, we might have bought, rehabilitated and either leased or resold these types of properties, but that was not the case.

The profession of landscape architecture contributes to the realization of many different types of projects, and a truly competitive firm must find its niche something that distinguishes it from other firms in its area. This “specialty” is what a consulting firm should consider for investment, assuming the end product is viable in the marketplace. If your firm helps others make money by designing and implementing land development projects, there is a good chance you can make money yourself.

Start small–and escalate.

Unless you have an unusually generous and trusting banker, start off small with your land investments and work your way up to larger, more expensive and, hopefully, more profitable projects. In the beginning, you may have to secure a loan with personal collateral to establish a track record.

You should, of course, avoid risking your “nest egg,” retirement plan or children’s savings accounts to invest in your first development project. The zoning approval or board-of-adjustment variance you need to make the project succeed could dissolve in front of your eyes because of behind-the-scenes political influences. It is better to work your way up to that first million-dollar loan unless other factors can reduce the risk. Each successful (that is, sold out) project will impress your bankers immeasurably, and they might actually approach you regarding a loan! The axiom that bankers only want to loan money to those who are not in desperate need seems to be true.

Develop for profit–not for speculation.

Select each project with the intention of selling out as quickly as possible. In this way you will pay less interest, reduce your overall debt load and reap profits sooner. Hillcrest has successfully directed itself into real estate investment by developing each and every parcel as soon after settlement as possible. We know of builders and developers who have made fortunes by investing or speculating in raw land outside the area’s limit of development at the time of purchase; however, they sometimes have to wait years before they can do anything with the property. Public sewers may need to be extended, or public highways may require substantial upgrading. In the meantime, the interest clock is ticking. Our goal has been to get in and out as quickly as the market will allow.

Develop a backup plan from the start.

Never commit to buying and developing land without a contingency plan. Go ahead and plan the project for maximum profit, but you should also consider an entirely different scheme if the first fails.

On our recent development of a 40-acre property near Wilmington, Delaware, Hillcrest secured the owners’ approval at the very beginning for seven to eight 5-acre lots 2 1/2 times the zoning minimum, instead of the 15 clustered 1-acre lots that were finally approved with a variance. We believed that if our cluster concept was not approved or did not sell as anticipated, at least we had an alternative).

On an earlier project, the three partners discussed the possibility of dividing the parcel into thirds if it would not sell as envisioned, and building their own private residences. All the lots that were planned were sold, but the partners were definitely prepared for the worst-case scenario.

Option the property if possible.

An option agreement is a written agreement between the seller and the buyer. It serves the seller with financial compensation, usually on a dollars-per-month basis for taking the property off the market for “not-to-exceed” period. Each month the buyer pays perhaps as much as $1,000 or more, but the agreement provides time to a secure all the approvals before committing to the overall deal. If the buyer fails to obtain the approvals needed, he or she simply backs out, having paid the seller a sum far smaller than the cost of the land. If all approvals clear and settlement becomes a reality, sometimes the seller will permit the option money paid to be applied toward the a purchase price.

Never commit to buying and developing land without a contingency plan. Go ahead and plan the project for maximum profit, but you should also consider an entirely different scheme if the first fails.

Such an agreement gives you, the a buyer, time to deal with the planning commission, highway department, civic groups, banks, lawyers and beautification boards that will have a legitimate and sometimes not-so-legitimate say about your proposed development. Usually a subdivision using the existing zoning is the easiest and shortest plan to accomplish. A rezoning is the most complex and requires the longest review process. In Newcastle County, Delaware, a subdivision requires about six months to obtain all necessary approvals; a rezoning, however, depending on the political controversy involved, could take two years or longer.

Negotiate with the bank for financing.

Assuming that your approvals are moving along as expected without any major setbacks, you should simultaneously be negotiating with several local banks for financing construction. They will ask for your a personal or business financial statement, as well as a detailed pro forma for the projects you are proposing. The pro forma would itemize all anticipated expenses associated with the project through its buildout, as well as all projected sales and revenues. Revenues should be realistic and conservative. Obviously, if you can obtain a purchase-money mortgage with attractive terms from the landowner, you will not need bank financing for that portion.

However, if the owner of the land prefers to “cash out,” then you will need bank a financing for everything. Contrary to popular belief, banks can be surprisingly flexible in these situations. Do not be afraid to ask for an amount over your anticipated fixed costs Show that amount as a contingency (10-20%), and they will appreciate the extra breathing room you have given yourself.

Practice what you preach.

Landscape Architects, using our specialized knowledge and training on how to develop land, are in an excellent position to practice what we preach. We can demonstrate to clients and the general public that human needs can be accommodated with minimal negative environmental and ecological impact. If we believe in letting the natural physical features of the site influence and direct a project’s ultimate design, we can demonstrate this principle ourselves. If we advocate subdivisions that do not look like a every other subdivision, we should develop several ourselves.

The risk of owning and developing your own land is great, but so is the potential for profit. The extra benefit of adding first-hand experience to your consulting practice is certainly worthwhile as well. Your consulting practice could very well increase; more clients should be willing to pay you more for helping them develop projects as successfully as you design and build for yourself.

Jeffrey W. Seemans is director of landscape architecture for Hillcrest Associates Inc., a land planning and engineering firm in Landenberg, PA. Part two of this story, “Risk Versus Reward,” will appear in the December issue of LASN.