Ep639: Morad Fiki – Don’t Partner With Someone Who Has Nothing to Lose

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to win in investing, you must take risk but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. And that mission has led me to create the become a better investor community where you get access to tools you need to create, grow and protect your wealth go to my worst investment ever.com right now to claim your spot. Fellow risk takers this is your worst podcast host Andrew Stotz, from a Stotz Academy, and I'm here with featured guest Morad Fiki, Morad are you ready to join the mission?

Morad Fiki 00:42
Yes, sir. Let's do this. I'm so excited. Thank you so much for having me, Andrew, I really appreciate it.

Andrew Stotz 00:47
Well, I'm really looking forward to it. And I know you were just telling me that your house is under renovation. So you're in a little bit of a noisy spot for us the listeners just bear with it because I know we've got some fun and interesting story coming up. Let me introduce you to the audience. Morad Fiki is a former US naval officer and a number one real estate expert on social media in Texas. He has been awarded top 1.4% Real estate agents in the United States through real trends and has over $100 million in career sales. We're on helps people who feel stuck in their careers and their lives and have no sales, no business, no customers and no idea where to go from here to get out of their own way and realize the greatness within themselves. He believes that once you do this, you can unlock your potential and take profound steps to live your best lives and have a business that reflects that Murad is on a mission to inspire 10 million real estate professionals and associated service providers to grow their businesses to six figures and beyond so that they can make a greater impact on their lives, families and communities Morad take a moment and tell us about the unique value that you bring to this wonderful world.

Morad Fiki 02:04
Oh my god. Thank you, Andy. That was such a kind introduction. And I really appreciate it. Yeah, to me, to me, it's all about innovation and creativity. And so there are million, about 1.51 point 6 million real estate agents across the United States. And how do you distinguish yourself amongst those? Here in Houston, Texas, there's about 45,000 Real estate agents. And I learned early on that the only way I'm going to survive in this cutthroat business is by distinguishing myself and bringing flavor, creativity, passion, to the use in real estate business use a real estate business has been super lame. And I wanted to bring flavor and passion and excitement. Get people excited about Houston real estate. And that's what I love doing.

Andrew Stotz 02:57
And what is the excitement that drives you? You know, in this job, I mean, some people, as you said, there's a lot of competitors out there and many of them don't bring the energy they don't bring the excitement. They're not the type of people you really want to work with.

Morad Fiki 03:13
Yeah, it's so boring. You know, when I came to the real estate business, it was just so worried. And the thing is, I've seen agents in New York and LA and Miami with flavor and creativity. And I said I got to do that in Houston. And that's what made me just really excited. The other thing about residential real estate, specifically luxury residential real estate used to, there's something so sexy and appealing. With luxury homes. I love it. Just seeing the architecture, the designs, the different styles of homes, you have contemporary homes, you have traditional homes, you have Spanish style homes. I mean, just seeing the different styles, the different flavors. It's so sexy and exciting. And I want to bring that to the masses. I want to bring Houston real estate to the world. Houston is the fourth largest city in the United States. And people don't know that behind New York, Los Angeles and Miami Houston is number four. So why are people not talking about Houston? That's been my mission is to get Houston know, on the international scale.

Andrew Stotz 04:28
You know, it's probably been about 35 or 40 years since I've been in Houston. Maybe you can just tell the audience particularly there's a lot of people outside of America that are listening in. Tell us just a little bit about what's unique about Houston.

Morad Fiki 04:43
Oh my gosh, where do I start? So Houston is a huge foodie town. We have some of the most incredible restaurants in the world and I've been around the world and and we have incredible restaurants incredible food. There is Houston is a melting pot of cultures, we have over 97 Different countries represented in Houston. Houston is the number two most known consulates. So there's, I think number one is New York but as far as consulates around the world different countries being represented usin is number two after New York and then we got the Houston Ship Channel. So Houston is the second largest port in the United States after Los Angeles. So we have been one of the largest ports, we import cars, we import lumber, we import products, ton of products that go all over the United States. And then I will also add two more things. On top of that. Houston is also has the Texas Medical Center, which is renowned around the world, people from around the world come to the MD Anderson Cancer Research Center for some of the latest greatest cancer treatments. Also we have I think there's 14 or 15 hospitals next to each other. Texas Children's Hospital is one of the best and foremost places where children can be seen and cared for some of the most strenuous illnesses are treated there. And people get visas Around the world come to the Texas Medical Center. That being said, it employs a ton of people in the medical fields, then the oil and gas business is huge. And Houston. Houston has a booming oil and gas town, Exxon Mobil, Shell, BP all of the major players are headquartered in Houston. It's interesting,

Andrew Stotz 06:43
because when I was growing up, that's all Houston really was. You know that I knew Houston for that time was the oil and gas. So that's fascinating. I didn't know about the port. And I guess also that probably means that the railway system out of Houston and then throughout the rest of the US is pretty strong. So that lots of things.

Morad Fiki 07:07
Very robust system. A lot of truck drivers are picking up products, moving them around the country. And so for this reason, usin is a huge melting pot of cultures of people. And just it there's a vibrancy and uses like the best kept secret. And then lastly, I'll add is the cost of living in Houston. And namely Texas is very low. When you compare it to LA and New York and Miami. What you can buy in Houston, when you buy a home. A million dollars goes way further in Houston than it does in New York and New York, you get a one bedroom, one bedroom, one bath apartment in Manhattan. And here in Houston. You know, depending on what area you're in, you can easily get a nice, huge home for a million dollars. And so that's a big win-win. I get bars who come in from New York and Los Angeles. We can't believe how much house you can get Euston for the same books that you get, oh, we're where they're from.

Andrew Stotz 08:11
And my a lot of my listeners are outside of America, but they do look at you know, buying American property and they may be looking at houses and stuff. And Houston is sounds like an interesting alternative. One of my questions is, you know, we're recording this on the 20th of December. And I'm just curious, like what's happening with real estate prices right now there you know what's going on in the real estate market. from an outsider's perspective, a foreigners perspective, who wanted to buy a house is now a good time. Should they wait a bit, you know, like what's going on in the real estate market as far as prices are concerned?

Morad Fiki 08:49
Absolutely. And so there's an inverse relationship when you look at interest rates and prices. And let me further Clank, so a year ago, interest rates were at record lows two and 3%. Having record low interest rates coupled with low interest for either the builder stopped building during COVID. So the lumber yards weren't producing lumber, the chip centers or all the cars were not producing chips. And so there was a huge shortage of cars and houses because the builders have to produce a certain amount of inventory to keep up with the market because the builders are way behind the power curve. And there's prediction that's going to take at least 10 years for them to get caught up if they can even get caught up. That being said low inventory with over low interest rates cause prices to rise. It's simple economics supply and demand. We have a low amount of supply and a huge amount of demand. All the prices go up because now your commodity which is your house is worth more. Now, that being said interest rates have doubled and are almost about the true poll in the last nine months, when interest rates rise rapidly, and the cost of purchasing, purchasing a home increases rapidly. There's an inverse relationship. So now 40% of the buyers have taken a step back and said, Whoa, there's too much change. Right now, I don't feel comfortable. Let me wait. I'm going to continue to rant. That being said, when 40% of the buyers step out, there's not as many buyers there's not as many people competing over homes. So those same homes that were getting 19 and 20 offers a year ago, are getting one maybe two offers meaning since there's not as many buyers guess what's happening to the prices, they're coming down. A year ago, sellers were getting a 15 20% markup on their houses. And now that's not happening, they have to be more honest and serious about the true value of their home, that extra 15% bump is not happening. So to answer your question, that's a long background. But to answer your question, is it a good time to buy? I would say absolutely. And I'll give you an example. My wife and I, we just bought our home here in Memorial, which is a highly coveted area in Houston. There is no way we close on it in July, there's no way we would have got the price that we did a year ago, that do I have a higher interest rate, of course, I do my interest rate. And I'm not scared to say my interest rate is 7.162%, which a year ago would have probably got a 3.5% interest rate. Now me instead of bickering and moaning and crying about that, I know for a fact, I got my house way below market now, a year ago, we would have paid 100,000, maybe more over than what we paid. So there's an inverse relationship. And that's what I mean, you're gonna get a high interest rate. But now since there's less competition, you get a great price. If there's a ton of competition, because the interest rates are free to 3% is just ridiculous, then you're gonna compete, you might have to pay it over the list price on that house.

Andrew Stotz 12:05
So it sounds like if a listener or viewer wants to buy a house in the US and there, they would consider Houston, now is probably a good time to start doing your research because the prices are attractive because of the factors that you mentioned. So what's the best way by the way for people to keep in touch with you to connect with you?

Morad Fiki 12:30
Oh, yeah, absolutely. So I will say I'm always on the premier website for luxury homes in Houston, Texas. And that's Houston, luxury, real estate.com You can always catch me use a luxury realestate.com I love to connect on social media. I am on every single platform, whatever is your favorite platform. Let's connect there. I'm on Twitter, I'm on Tik Tok. I'm on Facebook, I'm on LinkedIn, YouTube. Let's connect on your favorite platform. And I love to connect. I'm active on all of them. I keep the conversation going. I love social media. i For this reason, I've built a following of over 200,000 followers in a short amount of time, because I love the interactivity of social media. So I would love to connect on your favorite platform.

Andrew Stotz 13:19
All right, and we'll have links to all that in the show notes. So ladies and gentlemen, just come and click. Well, now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be tell us a bit about the circumstances leading up to it. And then tell us your story.

Morad Fiki 13:35
Oh my gosh, I can't wait to share this story with you. This is just so embarrassing. So you know, when I was a young, I'm still young, by the way. But when I first started in business, you know, I was getting my undergraduate degree at the Bauer College of Business here in Houston, Texas. And I wanted to be this magnet. I want to be this uber successful business tycoon. And so I was like, I'm going to, you know, I'm going to start companies, no matter of fact, even better, I'm gonna buy these restaurants. And I'm going to, you know, start liquidating selling them and then building well, we'll start with one and then we'll get another one and then we'll get another one and we'll get another one. And at first, I started looking at different franchising opportunities. Now, I had no experience in this whatsoever. I've never done this, I had no experience. And so I had a friend, my best friend from high school, this is, this is where it gets, like listen to what I'm saying. I said my best friend, you're very cautious of who you go to business with. You probably don't want to go into business with your friends. And so my best friend from high school, his older brother had worked in restaurants for a number of years he'd been in sous chef. He had been working restaurants for at least 15 and 20 years. So he knew how to cook. Great. And his dream was to own his own restaurant. And I said, do we partner, I'll acquire the restaurant, you run them. I'll fund them all, figure out all the financing, all the numbers, all the marketing, all the advertising, you run and operate the restaurant. And then we'll get one, we'll get another we'll get another we'll start this chain. It'll be amazing. Long story short, I found I ended up franchising seemed a little bit difficult at the time. And because we're starting from scratch, I thought, like, look, if I buy an existing restaurant that's already operating is already profitable, it's not going to be as difficult. And so I went ahead and got a business broker, he found me a pizza parlor. They were selling it, it was like $120,000, I ended up negotiating him down to like, 90,000. And

Andrew Stotz 16:10
how old were you at that time?

Morad Fiki 16:13
I was when T.

Andrew Stotz 16:18
Money when you're 23.

Morad Fiki 16:21
Yeah. And I had already lined up the financing. So I wasn't even using my own money. I was using the bank's money, which is even more complicated and dangerous, if the business doesn't produce because I'm on the hook for that one. And then another big mistake I made. I went to business in a partnership with someone else who's putting zero investment on their part, he was only going to put his sweat equity. And I was okay with that. And that was crazy. And that's the biggest lesson that I learned. You don't go into business on a partnership with someone that they have nothing to lose. Because with him putting no money into this movie is if it wasn't working out, he could just walk away and say, well, it didn't work out, you know, and I'm on the hook for the money. It was my name, I signed everything. Not even that I went to the sales tax office, I got the license in my name. And I didn't know. And he went with me. But he didn't he didn't have an ID that day. So they wouldn't let him sign because they're like, only I can sign. Because I only signed I was on the hook for the whole amount. Long story short, I didn't do a good job of due diligence. I didn't verify all the numbers were accurate bank statements. And so when we took over the business, it wasn't making the amount of money that this guy said it was making. You know, it was lucky to break even. And I didn't understand and I started putting out flyers, I was trying to advertise heavily. Because I was like, ``Where are the customers. And we had a few customers, but they weren't enough to keep this business going. And so this guy lied, he lied on the financials and lied on everything. And because I didn't know how to do due diligence properly, I didn't verify everything. So I got taken advantage of. And then when my partner so then I tried to sell it before it was going to go under, I saw that there was no money in this. And then I hired the same business broker that sold it to me. The thing is, when we had buyers come look at the pizza parlor. They were very well sophisticated, they would look at everything and then say, hey, there's no money here. You know, and so we couldn't sell it. And then my partner was like, this isn't working, I'm gonna go get a job. And he left, left me high and dry. And long story short, the business went under, I was on the hook for everything. I was angry, I was pissed. And then I get a letter from the sales tax office saying I owe them like $25,000 Because no one paid the sales tax. And fortunately, I went on active duty in the US Navy, they were able to allow me to reduce those amounts to more like five or 6000. And they let me make payments on it. They weighed all the past due interest and penalties because I was in service. And, I told him my business partner bailed on me. You know, he doesn't care. I'm taking responsibility of this. So I'll pay for it. And it was a huge lesson. Huge lesson learned.

Andrew Stotz 19:31
And how long did it take you to finish all your obligations related to that?

Morad Fiki 19:38
Oh, man, yeah, a number of years took me a number of years to pay everything back and get it all resolved and get the sales tax paid off and huge lesson and the guy didn't give a damn and he was a friend. A long time friend. But I learned like if someone has nothing to lose, he had nothing. He said In fact, when I was trying to sell it, he was putting all these demands on me. Look, I want $50,000 Because of all the time and sweat that I put into this, and I'm gonna do you quit nothing except your time. Like you, you've failed on your part saying we're going to make this place profitable. He made all these promises, hey, no matter what we hit, it's, we're going to make it, boom, it's gonna take off. And then his girlfriend left him and she went to Mexico, he like left to Mexico to go find her and left the business totally left it abandoned if he had the employees running it. Like with no oversight. It was crazy. I couldn't believe it.

Andrew Stotz 20:39
How would you summarize the lessons that you learned?

Morad Fiki 20:43
I learned number one, don't rush into something, if you don't feel 100% good about it, it's better to walk away and reassess. Now, I'm not saying never take a risk. You know, that's not you know, any business investment, any business enterprise is going to be risky. I'm not saying never take a risk. But but fully evaluate that risk, fully evaluate that, you know, I should have definitely done better due diligence, I should verify bank records, we had the financial state, let's see the bank, the bank statement, I want to see these deposits, I want to see how much money you're making the bank statements will tell the truth regarding cash flow, I didn't really know that. So when we took over the business, we're making nearly not even close to what we what he had indicated, I could have sued him, but, you know, spin another $100,000 filing a lawsuit. So, you know, it was it was a valuable lesson more expensive than college, but I learned so much more than calling,

Andrew Stotz 21:52
maybe I'll share a few things that I take away from your story. You know, just to kind of recap what you went through, you know, the first thing is, you know, you started off by talking about how you wanted to be a tycoon. And you know, you had that excitement, and thinking about buying and selling restaurants, which sounds really sexy on the face of it, but you had no experience. And then this idea of, you know, the first person that kind of came along your friend's brother, and, you know, it seemed like, hey, this may work. And then after that, you know, the idea that, hey, I'll fund it, and you run it, we also kind of learn from this story, that that's not always the best way to do it, that you want people to have skin in the game. It's also interesting, you know, that you had a line of bank money in at such a young age. And what's interesting about that is you would think that the bank would help with due diligence. In other words, the bank would demand to see the financials to see the cash state, you know, the bank statements, because ultimately, they're on the line, you know, with getting their money back. The other thing that you mentioned about, you know, is due diligence. And it's interesting in that the number one reason why people make a mistake and have their worst investment that I've seen is that they don't do their research. So this is a great example of really being great at doing your research. And also what I thought about when you were talking about how, you know, when you bought the business through this business broker, you weren't sophisticated buyer, but when you go to sell it, all the buyers are, of course going to be sophisticated. So it's like, you get screwed on both, you know, angles. And the last thing that I would share is that, you know, a lot of times we look at capitalism, and we look at big businesses and their success, and we say look at the success of capitalism, for you know, these companies and all the people that they employ. But it's more even more important to me to think about the millions and millions of business people and businesses that are going bankrupt right now. That is capitalism, also, the lessons that are learned, if you cannot deploy your capital, well, if you cannot run your business, well, you are going to go out of business. And that also is the beauty of capitalism. And the lessons you learned. Fantastic. Anything you would comment on on what I've shared.

Morad Fiki 24:25
Oh, you hit the nail on the head. Absolutely. 100%. You know, looking back, I learned if this if my friend's brother wasn't going to put any skin in the game, then he could have been an employee. You know, he was actually an employee, I gave him a partnership. I gave him half of the company for no reason because he had nothing to invest, you know, and so, so when it came time when things got bad, he was able to walk away and he did. You walked away. You walked away because it was like you know what? And then the other thing when I was thinking like I was trying to sell it, he wasn't helping. He was over there. These sophisticated buyers would go over there, meet with him, ask him questions. He had a bad attitude. He was like, you know, he wasn't trying to help me sell it. Because he was thinking because he was being greedy. He was thinking, okay, Murad is giving away our company. And I put my time and money into this. I want $50,000 Cash, like, you haven't done anything for this company. You didn't increase the revenues. You didn't even and then he didn't even help me sell it. So it's like, you're only you're counting how much money am I going to get? Done? Nothing. You know, and so he was giving them a hard time. And he was giving them a hard time like, oh, yeah, we're not doing that well, and he wasn't really helping me sell it. And, and the last thing I would add, is exactly what you said about the sophisticated buyers. You know, I wasn't a sophisticated buyer. My, I was looking up to Tillman. Fertitta billionaire, Tilman Fertitta here in Houston. He's the owner of Landry's restaurant Corporation. And I'm sure you know, he's one of the wealthiest Americans anyway, he started useful. So I was looking at his example. He started with one restaurant and then bought another one and bought another one and bought another one. And now he owns, I don't know, 1000s of restaurants around the world casinos, he owns the Houston Rockets. But the difference is, he gained experience with that one restaurant, he made it profitable. And that's how you move on to the next one. And the next one, you know, I was already looking at that vision. And I hadn't even been successful yet. Even with one I wasn't proven yet. And I kind of rushed into it. You know, when I saw, we had a hiccup during my purchase when I was trying to purchase it. There was a hiccup. And the owner showed me that he was desperate. He ended up walking out of closing it was over like $1,000 It was over $1,500 deposit that I didn't think I should have paid for it. He wanted me to pay for it. He ended up leaving saying you know what, I'm not gonna let you buy my business. And I was like, that's fine. He left. And he really act childish. It was then I should have walked away. I should have said no, you know what? This doesn't add up.

Andrew Stotz 27:22
So let's, let's go back in time and think about that moment, you know, when you got excited about this business and all that. And let's think about a young man or woman right now, who's in that same place where they see an opportunity based on what you learned from this story? And what you continue to learn? What action would you recommend our listeners take to avoid suffering the same fate?

Morad Fiki 27:43
I'll recommend two. Okay, number one, if you don't feel totally good about something, and that doesn't mean you're not going to feel nervous when you're going into a new business. Of course you will. But if you feel like something's off, hey, this doesn't add up. It doesn't make sense. Why is this guy selling his business doesn't mean that great businesses don't get sold. But why is he selling it? If it's so good. He told me Oh, I bought it for my son. And my son has no interest in running it. So, and then the Oh, okay. Now Now remember another thing, then I asked to see his tax returns. He said, I'm not giving you my tax returns, you don't need to see that. And I said, Okay, well, I'm not gonna buy it. Then he gave it to me. And then he tried to explain it. But there was a lot of hesitancy on simple things. Now, I wasn't asking you to see his personal tax returns, I want you to business tax returns, how much money if you're making so much money? How much money? Are you reporting to the IRS? Yep. You know, like, if you're making money, are you reporting that income to the IRS? And he was, and that's why he didn't want to need the sales tax returns. So then he tried to justify why he wasn't, you know why I didn't report it to the IRS because I wanted, you know, I didn't want to pay them all those taxes. It's like, it didn't add up. And when you have that feeling, you got to listen to your son. You got to listen to that inner voice of God, like, this is not a good, there's something wrong here. Let's go look for something else. You know, this isn't the only thing. Then the second point I want to make as my brothers, my friend's brother was pushing me. He had nothing to lose. Of course, he was pushing me. In fact, he was in between jobs. He had just quit his other job. So he needed a job. And he was broke. And so I started loaning him money, I needed $1,000 I gave it to him. And he's like, Man, I'm gonna pay you back through the business. And then I gave him like another $500. I forget at the time, there's like, ended up being like, total $2,500 before we even started, and he was like, Oh, I'm gonna pay you back. And I was like, Dude, I know you are. Don't worry about it. I trusted him because I knew that's not the right way. He's able to do this. Now he had zero to invest. So he shouldn't even been upon. I could have hired him as an employee, but he had, he had nothing to invest. So how would he be a partner?

Andrew Stotz 30:12
So what's a resource you'd recommend for our listeners?

Morad Fiki 30:18
Wow, there's so many. But I would say thinking Grow Rich is probably the greatest business book of all time written by Napoleon Hill. If you haven't read it 10 times, you haven't even started to understand this. It's a great starting point. So just think and think big. Also, the 10x rule by Grant Cardone, the 10x rule is a great book, Grant Cardone was probably my favorite mentor. I've learned so much from him about marketing, advertising and just working hard. But the 10x rule is a classic business book and a new one that's written by him. If you can listen to it on Audible, that's even better, because he adlibs it and he's so passionate, and I love it. Yeah, I would recommend those two books.

Andrew Stotz 31:05
Yep. Great, great advice. And last question, what is your number one goal for the next 12 months?

Morad Fiki 31:12
Wow, I've so many goals. But I would say, you know, I want to continue to make an impact on the Houston real estate business, I need to get known. And even though I'm in the top 200 agents in Houston, out of over 45,000 agents, I need to be in the top 10, the top 10. And then, you know, I want to start getting some recognition. And not just that, but the impact that I'm having the creativity, the passion, the energy that I'm bringing into some real estate. And that's what I really want to make an impact on.

Andrew Stotz 31:47
Fantastic. Well, there you have it another story of loss to keep you winning. If you haven't yet joined the become a better investor community just go to my worst investment ever.com Right now, as we conclude Murad, I want to thank you again for joining our mission and on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Morad Fiki 32:12
I just want to thank you, Andrew, for giving me a chance to talk to your audience. I really appreciate it. Thank you so much. I would love to keep the conversation going on social media. Let's connect. And thank you so much, Andrew, there's anything I can do for you.

Andrew Stotz 32:26
Appreciate and that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate that today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host Andrew Stotz saying. I'll see you on the upside.