Waad Nadhir - The Psychology behind Commercial Real Estate Financing

Waad Nadhir - The Psychology behind Commercial Real Estate Financing Waad Nadhir is a successful commercial real estate investor who has extensive experience in negotiating with banks.

Beginner investors in commercial real estate think that the hardest part of dealing with commercial real estate is finding and analyzing deals. Professional investors know that getting financing is much more complicated than finding deals.

Even as little as a few decades ago a person could not walk into a bank and apply for a mortgage. A phone call with an appointment request had to come in first. Then you’d get an appointment for which you’d need to wait a week or two. Next, you would have to visit a branch in person and sit on a low chair in front of a bank manager sitting behind a huge oak desk.

Banks wanted to build relationships, demanded loyalty and usually received what they wanted. A bank wanted you to do all your business with it and switch all your accounts to it if you were applying for a mortgage there.

The times have changed. The market today is much more mature and money is being treated like a commodity. Getting financing is somewhat similar to renting a car at an airport, where most of the rental companies provide cars similar in age, price, and condition. While it is definitely easier today to apply for a mortgage than it was twenty years ago, you need to understand lender psychology to increase your chances of approval.

Banks do not generally understand the business of real estate. They are not in the real estate business. They are in the money lending and managing business. Most of the bank workers you’ll be dealing with will have employee mentality. Their biggest fear is to lose their jobs and the biggest goal is to get a bonus or a raise at the end of the year. They think that they can get what they want and avoid being fired by having no bad debt on their books.

This is why they are always trying to figure out if lending you money is a good deal for them.

They do not care much about how great of a deal you found, how rare it is or how much money you’ll make. Their worst scenario is you defaulting on your mortgage and them losing a two-percent salary increase.

The best way to deal with this fear is to convince bank employees that your property is really good and chances of your defaulting on your mortgage are equal to zero. This is one of the strategies that real estate experts like Waad Nadhir use to make great deals.

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