Waad Nadhir -How Mortgages Really Work

Waad Nadhir has been president of BOSC Realty Advisors since 1989.

Many people think that getting real estate financing is similar to signing a lease on a piece of real estate. Someone who grants a lease is a lessor or the landlord. Someone who takes on a lease is the tenant or lessee. People then assume that when they get a mortgage from a bank they are a mortgagee, the bank is the mortgagor, but this is not how real estate financing works.

Generally speaking, when you want to acquire a commercial real estate property, you do not have the necessary amount of money in order to do so. Even if you do have the entire amount in cash, it is often not smart to part away with it because you lose leverage and cash that you could use to make other deals happen.

Banks have the money that you need, but they have no interest in buying the property on their own. This means that you want to buy the property but don’t have the necessary amount of money and a bank has the money but doesn’t want to buy the property. You then go to the bank and essentially give a pledge to return principal with interest if the bank helps you. This pledge is called a mortgage. You are the one giving a pledge, which makes you a mortgagor and the bank is the recipient of the pledge, which makes it the mortgagee. You are providing a bank with a mortgage in exchange for a given amount of money.

Here’s why this is important: many people think that when applying for a mortgage, they are asking a bank for money. In reality, you are not asking for anything, but you are offering to make a deal. There is a big difference in asking your friend for an expensive piece of equipment that you could use during your vacation and asking to store your Bugatti in your friend’s garage while you are away.

You will feel very differently when you realize that you are not asking for money, but are offering a pledge to the bank.

Once you make your offer, you bankers will want to know what they will get if they choose to make a deal with you. They also want to know the level of certainty that the deal involves. For example, if the property is fully leased and comes with a rental income, then you want to communicate the numbers to your bank. Bankers know that your ability to pay off your mortgage depends on the length of your leases and quality of your tenants. Finally, tell your bankers about the cash flow surplus. Do not create a lengthy spreadsheet. Rather, summarize everything in a few sentences to build confidence that you are a wise investor who is offering a great deal to the bank just like Waad Nadhir would do.

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Waad Nadhir – A Short Guide to Developing Commercial Real Estate

Waad Nadhir is a commercial real estate developer who has been successful throughout his lengthy career in the field. He is currently serving as the President and Co-Founder of BOSC Realty Advisors, and he is also a consultant for a Steadfast Companies, which is property management and development company. Here is a short guide to success in commercial real estate development.

Understand that location is the most important factor in your decision to lease or own commercial real estate. You need to pick a place that you know will have a decent amount of foot traffic, that is in an up and coming community, and is surrounded by businesses that will be conducive to your purpose. The location can ruin a good business, and it can make an average business successful.

Don’t be afraid to hold off on developing a property until it become financially optimal to do so. This is a common practice amongst professionals in the industry because some land can be worth more when developed at a later time. This is especially true if you’ve invested in land in an area you know will be on the rise in the near future.

Commercial real estate needs to be continuously improved in order to be lucrative. Customer wants and needs change all the time, and you have to update your property in order to serve these changes in interest. All things change over time, and this includes the property you rent, control, or own.

Waad Nadhir understands what it takes to be successful as a developer of commercial real estate for his company, BOSC Realty Advisors.