Waad Nadhir – Commercial Real Estate and Return on Investment

Waad Nadhir has been in commercial real estate business since 1989.

The concept of return on investment or ROI is one of the most commonly used factors in evaluating real estate deals. However, this factor comes with a lot of variables and nuances.

For example, if ROI is rental income divided by the price of the building, do you measure gross income or net income? If you are talking about net income, are you looking at pre-tax or after-tax numbers? Also, do you take mortgage interest into consideration when calculating your expenses?

There are two big issues with ROI in commercial real estate investing. The first one is that there is no such thing as a generally great ROI because every investor has his own or her goals, resources and circumstances. This is why a property with an eight percent ROI can be a great deal for one investor and terrible for someone else. Secondly, ROI is just a snapshot that shows how a property is doing in the moment. It does not show or tell anything about the future.

Most beginner investors try to write down numbers on a piece of paper and work out different ratios. The problem with this approach is that they are very likely to forget something like management fees or vacancy rates that can change numbers drastically. This is why you want to create a spreadsheet that you can use every single time to get the same kind of numbers. You can also use different pieces of software that are now available on the market. This being said, it is impossible for any spreadsheet or software to tell you with absolute certainty whether you should do a deal or not. The best way to know if you should do a deal is to acquire knowledge and build extensive practical experience like Waad Nadhir did.

 

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Waad Nadhir – How to Find Great Commercial Retail Estate

Since becoming president of BOSC Realty Advisors in 1989 Waad Nadhir has acquired, financed and developed multiple commercial real estate properties including office buildings, shopping centers and single tenant buildings.

A lot of beginner investors in commercial real estate want to know one way to find great deals. They also want to know the name of one bank that will provide them with financing, one area of town to look for buildings, one key to success. Experienced professionals know that success is a combination of hard work, building connections and looking in many places, be it finding deals or getting great financing.

Get on the mailing lists of commercial real estate brokerages to see what their inventory looks like. A lot of commercial real estate investors want to avoid dealing with real estate agents in order to not pay any commissions. Such real estate investors forget that it’s the seller who pays the commission, so you have nothing to lose if you are a buyer.

The best way to choose a real estate agent is to interview several of them. This does not mean conducting a formal interview in a business setting, but rather meeting with a few real estate agents, talking about what they are doing and getting a feel whether you are going to be a good match or not. For example, some commercial real estate investors are afraid of agents who are also investors on the grounds that an investor-agent will keep all the great deals to him- or herself. In reality, every investor has a unique set of objectives and circumstances. Investors such as Waad Nadhir know that it’s much easier to deal with someone who understands what you do than deal with someone who is clueless about your business.