In this episode of Executive Connect, Melissa Aarskaug sits down with veteran real estate investor, brokerage founder, and capital allocator Lon Welsh to unpack what it really takes to build durable wealth through real estate across market cycles. From scaling one of Colorado’s largest independent brokerages to launching Ironton Capital and raising nearly $100 million for passive investors, Lon shares the strategic thinking behind portfolio construction, diversification, and risk management that most investors never learn. This conversation goes beyond transactions and tactics. It explores how timing, diversification, sponsor selection, and market cycles shape long-term outcomes, and why passive investing can offer stability, scale, and peace of mind when done correctly.

Chapters:

(00:00) Why one deal delivered a 50 percent annualized return

(01:01) Lon Welsh’s background and building a real estate ecosystem

(02:05) From corporate finance to full time real estate investing

(03:25) Buying properties versus constructing a portfolio

(04:10) Active investing versus passive investing explained

(05:24) Why concentrating in one market increases risk

(06:16) Asset type diversification and renovation strategies

(07:12) Real world example of portfolio diversification during hurricanes

(08:23) Scaling a brokerage to 750 agents and billions in sales

(09:08) Choosing the right market and business model to scale

(10:28) Using data and analytics to gain an unfair advantage

(12:12) Local investing versus investing across states

(14:06) What passive real estate investing actually looks like

(15:07) Understanding sponsor track records and market cycles

(16:20) When timing creates outsized returns and when it does not

(17:02) Why diversification protects investors from total loss

(18:50) Lessons learned from early investing mistakes

(19:54) Acquisitions, culture fit, and scaling through M&A

(21:36) How to evaluate culture before buying a business

(25:18) Building resilience through market downturns

(26:49) Why fundamentals beat fear during volatile cycles

(27:43) Adapting strategy across economic phases

(30:24) Transactional versus relationship driven business models

(32:48) Why diversification matters more in uncertain markets

(33:05) Free resources for learning passive real estate investing

(35:01) National real estate and economic trends explained

(36:01) Final thoughts on building wealth that lasts

Lon

(0:00) Well, the very first fund that we ran, we had eight investments, and we had one that ended up delivering over 50% annualized return to our funded partners. (0:09) And I’d love to be able to tell you that I’m like this genius, like we did all these great things, and it just could be all bullshit. (0:15) So what we had was a really strong project that should have been like in the mid-20s, like a really solid project.

(0:23) But we bought this in like March or April of 2020, when it was like panic time with COVID, and we got an unusually good price, so we were able to really negotiate hard.

Melissa

(0:34) What do billion-dollar brokerages, best-selling books, and the Denver Zoo all have in common? (0:42) Lon Welch. (0:43) Today’s guest has spent over two decades not just building real estate companies, but shaping how people think about investing all together, from founding Iron Capital to running Colorado’s largest independent brokerage with over 750 agents.

(1:01) Lon has done it all. (1:03) If you’ve ever wondered how to construct a portfolio that lasts, today is your masterclass. (1:09) Welcome, Lon.

Lon

(1:11) Thanks for having me. (1:12) I appreciate it.

Melissa

(1:14) Excited to have you today. (1:16) Now, you’ve built multiple real estate brokerages, title companies, investment companies. (1:22) Take us back.

(1:23) How did you get started, and when did you realize that building one company, but the entire ecosystem, was the right strategy?

Lon

(1:34) I worked in corporate finance for a couple years, and I went back to business school, and then I worked as a strategy consultant for eight years at Deloitte and then Accenture. (1:42) And after I got out of grad school, my wife and I had like a lot of student debt, and I was trying to figure out like, how are we ever going to be able to retire? (1:49) So, I read this book, Rich Dad, Poor Dad.

(1:51) I’m probably the only person on your shows that ever talked about that, and I figured that real estate investing might work better for me than the traditional stock market. (1:59) So, when I left Accenture, I went into real estate, and I’ve been in real estate for a couple decades. (2:05) I originally got into it as an investor, built a lot of tools to help me be better at that, and realized that nobody else had things like that.

(2:12) But well, if I started a brokerage, I could probably find other people that were investor-oriented, and sure enough, there was more of them than I thought. (2:20) So, I was able to grow it to be a pretty good-sized brokerage, the largest in Colorado. (2:23) I sold that to a private equity company at the end of 21, right before the rates went up.

(2:28) And during that path, the business partner and I built a title company. (2:32) Title companies and brokers are like peanut butter and jelly. (2:35) They just really go together fantastic.

(2:38) Sold that to Compass in November of 21, and was semi-retired for two or three months, realized I missed working, and started Ironton Capital shortly after that. (2:48) So, I help people invest passively in real estate, using the same strategy I’ve used as an investor for the last couple of decades. (2:54) And it’s great.

(2:55) We’ve raised almost $100 million in three years from friends and family, and it’s been just a really good ride so far.

Melissa

(3:01) I love it. (3:01) Now, you said rich dad, poor dad. (3:03) Did I hear that correctly?

Lon

(3:04) Yeah.

Melissa

(3:05) It’s so funny. (3:06) I read the same book and got interested in real estate. (3:10) Funny how that happens for us.

(3:12) And I’ve read, gosh, I don’t even know how many books are in his series now, but it’s interesting start. (3:19) Now, you yourself have written exclusively on real estate investing. (3:25) For listeners who are newer in real estate investing, what’s the difference between simply buying properties and actually constructing a portfolio?

(3:34) Can you share the differences for us?

Lon

(3:37) Well, you could do it either way. (3:39) So, in the first 20 years of my career running a brokerage, I was doing a lot of classes to teach people how to invest, which is sort of an active strategy. (3:46) You’re picking the property, you’re on the loan, you’re making all the decisions, you’re the property manager or hiring the property manager, you decide when to sell it.

(3:54) So, as long as you’ve got the patience for it, that historically has been a very good way to build a lot of wealth in a very slow motion, but it works great. (4:02) Some people get tired of being an active landlord and dealing with it. (4:06) So, they’d rather get the benefits of real estate investing by investing passively.

(4:10) And that’s hiring me or someone like me. (4:13) We’ll build a portfolio of, say, 30 properties in 10 different states using different strategies, different asset types, and then you own a tiny piece of all of them. (4:21) Just like you have a mutual fund probably in your IRA that’s got a whole bunch of different stocks in it.

(4:26) In any given year, a couple of them are like Nvidia and they’re doing great. (4:29) A couple don’t do so great and the rest are just sort of average and it all blends out. (4:33) The same thing.

(4:34) And yeah, if you want to talk about how to build a portfolio, we can certainly talk about all that too.

Melissa

(4:38) Yeah. (4:39) And I think I got my start in rental properties. (4:42) And so, as you were saying, that can be a very difficult, daunting, non-profitable kind of business, running rentals and tenants ruining your properties and not paying their bills and chasing all that.

(4:58) So, maybe you could share a little bit about the fun side of actually building the long-term strategy with these portfolios of properties.

Lon

(5:11) Yeah. (5:11) So, if you’re an active investor, what you don’t want to do is just be in one market using one asset type, like maybe single-family home rentals, because it’s just too narrowly defined. (5:24) So, in Colorado, for example, over the last three years, the Colorado legislature has passed about a dozen pieces of legislation that are all anti-landlord and pro-tenant.

(5:32) And this has gone from being sort of a neutral state to being actually kind of investor hostile, just in the case of three years. (5:38) And if you have all of your eggs in one basket, you’d be really in a difficult situation. (5:43) So, I’ll give you an example.

(5:44) Imagine you’ve got a 12-unit building, you’ve got one renter in there who’s really difficult and you’re just not going to renew them because they smoke pot all the time, they have loud parties and irritate all the other good tenants. (5:53) You no longer have the right to make that decision. (5:55) If that tenant wants to stay in the building, you have to renew their lease.

(5:58) You don’t get to pick. (6:00) Can you imagine? (6:02) I don’t know who’s making up these rules.

(6:03) All I know is the state legislature does it. (6:05) So, what we want to try to do is have about two-thirds of what we do on the passive side be multifamily and the rest is either industrial or hospitality. (6:16) About half of them, from a strategy standpoint, are new construction.

(6:19) The other half are heavy renovation of an existing asset, which I really love. (6:23) You know, if we can buy a building that’s been neglected at a really good price and the rents were say $400 a month less than everybody else, all I have to do is renovate it to the standard of my competitors and I’m raising it up by $400. (6:36) It doesn’t matter what happens to Ukraine, what the Fed does with interest rates, what happens to the stock market.

(6:40) I can control my own destiny, which is really nice in an economy like this. (6:44) And then we try to have some diversification among who is the sponsor running all these different projects because every sponsor who coordinates a project has strengths and blind spots. (6:54) So, if you’ve got all of your money with one sponsor and that one blind spot comes to bite them, all of your investments could be at risk.

(7:02) You want to make sure you diversify as much as you can. (7:04) So, as an example, about this time last year, you remember there was two hurricanes back to back that hit Tampa and we had an apartment building there. (7:12) I remember going to bed one night thinking, God, I’m going to wake up tomorrow morning and there’s going to be a foot of water in this apartment building.

(7:16) That’s exactly what happened. (7:17) But it was 3% of the portfolio. (7:19) So, it just didn’t matter that much.

(7:21) You can imagine if like all your stuff was in Tampa, you wouldn’t have slept.

Melissa

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(8:04) I’ve had some real estate in some bad areas and it was not good. (8:10) So, I love this idea. (8:11) I want to talk a little bit more about, I mean, 750 agents and $2.8 billion in annual sales. (8:20) It’s no small business. (8:21) I mean, it’s massive. (8:23) It’s a massive business.

(8:24) And so, I want to talk about some of the biggest lessons that you’ve learned and building something of that magnitude and things that you can share with our listeners as it relates to that.

Lon

(8:38) Well, it sounds like you’ve got a listener base. (8:39) It’s a lot of very successful executives that maybe want to make the transition to entrepreneurship. (8:44) So, the first idea I’d share with all of you guys is pick something that you really enjoy because you’re going to be spending a lot of hours at it for several years and your family’s going to be hearing about this nonstop.

(8:53) So, don’t pick something because you think it’s a great idea. (8:56) Pick it because it’s a reasonably good idea and you’re really passionate about it or else you’re going to really have a hard time maintaining the enthusiasm and energy that’s going to be necessary. (9:04) I think the next thing is try to identify a market that’s relatively big.

(9:08) You don’t want to be the master of something where you can only sell $50,000 a year and you’re not going to be able to make a living at it. (9:14) Real estate is a giant market so that worked out great. (9:17) If you could pick an industry that isn’t that sophisticated as opposed to one that’s very sophisticated, that’s just going to make everything a lot easier.

(9:25) One of the things that always surprised me with every realtor that I worked with is that a lot of them just had business literacy gaps. (9:32) They were very good at the transaction. (9:34) They had very good interpersonal skills.

(9:35) They could certainly write a contract, but they didn’t have a lot of business strategy. (9:40) When I got to meet more realtors, I realized I could probably do pretty well competing with this group. (9:47) Then, I think one of the last keys is if you naturally have some sort of an edge that you think would have at least a segment within the market that would be attractive so you’re not fighting.

(9:57) What I don’t want to do is offer a commodity product in a commodity market and it’s just like a knife fight every day. (10:02) What’s the competition? (10:03) Well, price, price, and price.

(10:05) It’s a very difficult way to make a living. (10:08) I was able to bring some analytical tools to this. (10:11) For example, nobody could tell me in Denver what neighborhoods I should buy rentals in.

(10:18) I remember going to my first managing broker. (10:21) I brought him a possible rental. (10:22) I said, do you think I should buy this?

(10:24) I don’t know. (10:24) Do you like the floor plan? (10:25) God, is that the best you could do?

(10:28) I broke Denver into 450 little neighborhoods and we built a supply-demand model for every single neighborhood. (10:33) I could tell you which neighborhoods were most likely to see price appreciation, which ones weren’t, and why that was. (10:39) We overlaid what the rents were in each of those markets and how much rental capacity was in each market.

(10:43) We could build a forward forecast of how desirable is it to be in each one of these different neighborhoods. (10:48) I could go from just saying Denver’s a good place to rent to saying these 18 neighborhoods out of 450 are probably the best bet. (10:55) We should probably start with those.

(10:57) It was a really helpful set of tools for me just to make an educated decision. (11:01) It turns out when I talked to other people who wanted to invest, it was easy for me to attract investor clients. (11:06) It was easy for me to attract people who wanted to be investor-focused agents to our brokerage.

(11:10) We gave them the tools that were really an unfair advantage. (11:13) If you can just stumble across something like that, then you’ve got a niche that will just make your life a lot easier if you’re trying to scale up. (11:22) It sounds easy when I explain it like that.

Melissa

(11:24) It does. (11:25) It sounds super easy. (11:28) As we’re talking, I’m thinking about I made some mistakes in real estate very young by overextending myself in real estate.

(11:40) I didn’t have and I didn’t break down the market. (11:43) I was one of those 2007, 2008 people. (11:47) You remember those years?

(11:50) One of the things I thought was really interesting is some of my peers that were investing, they were living in Nevada at the time, but they weren’t investing in Nevada. (12:01) They were investing across the United States. (12:04) I’m curious about your take on focusing on where you live or expanding out.

(12:12) How does that work? (12:13) Expanding around the United States or just staying local and focused on what you know?

Lon

(12:19) When I was running the brokerage and mostly working with active investors, everything we did was in Colorado. (12:23) This was a market we knew incredibly well. (12:27) It was really a shift for me when I launched Ironton Capital to help people invest passively because we wanted to try to be in about 10 or 15 different states.

(12:35) There’s actually three of us full-time that fly out to go see these projects. (12:40) They have to learn that market. (12:41) It’s a lot more work.

(12:43) I’m turning over all these rocks. (12:45) I would say if you’re going to be an active investor and just buy two, five rental houses, which is a fabulous strategy if you’re in a market where they’ll cash flow okay, I’d probably stick to your backyard because you know it really well. (12:58) If you’re going to try to pick a different location, I’d want to make sure it was a place that you liked and was easy to get to.

(13:05) If part of your family lives in Savannah, Georgia, and it’s a beautiful place you like to go visit a couple of times a year anyway and you want to buy some rentals there because they cash flow better than maybe you live in Chicago or something, that’d be great because now you can write off all your trips to go see your family because you’re going to check on the rentals while you’re there anyway. (13:22) What you don’t want is someplace you got to fly to that, I won’t pick any name, but City X that you really dislike. (13:30) You got to make two connections on airports and then drive three hours to get there just because you were chasing a little bit of extra cash flow.

(13:37) Your third trip you’re going to absolutely hate life and you might have a lot more trips after that. (13:43) Try to pick something that’s easy for you to do. (13:45) It’ll just make the whole path a lot easier and your spouse won’t hate you along the way.

Melissa

(13:50) Yes, so true. (13:52) I’m thinking back to like that 2007-2008 time frame where I went from actively to more passively because I felt like it was safer for me and I didn’t have kind of all the knowledge that I needed. (14:06) Talk to me a little bit about passive investing.

(14:09) You’ve actually wrote a book on the Complete Guide to Passive Diversification in Real Estate Investing. (14:17) What does that actually look like from your perspective in practice? (14:22) Then maybe the second piece of that, talk to me a little bit about some of the mistakes that investors make when they invest passively.

Lon

(14:31) Wow, there’s a lot of really good stuff there. (14:33) I think from a passive standpoint, it’s just really getting to know the sponsor, me or someone like me, that you’re going to be working with and understanding what’s their approach to underwriting. (14:43) What markets do they like?

(14:45) What strategy do they have? (14:46) Have they been doing it for a couple decades? (14:48) How did it work during 2007?

(14:50) Then in 2010, which is a fabulous time to buy, how did it work then? (14:55) It was a little scary there for the first part of 2020 when COVID really had us all in its grip. (15:01) If you could talk about how that strategy worked at different phases of the market cycle, that’ll really give you a lot of insight.

(15:07) I’d also want to try to find out, is this someone who’s just trying to maximize returns or is it someone who’s trying to make a reasonable amount? (15:14) Our goal is to make a reasonable amount of money, somewhere around 17% a year and take as little risk as we possibly can. (15:21) We could go all out and try to get something in the low 20s, but it’s a lot more risk.

(15:26) If we can consistently deliver around 17% a year over a decade, it’s absolutely phenomenal what we can do for you. (15:34) As far as mistakes, I guess what I would do is just make sure that you vet out their track record. (15:41) One of the things I think a lot of people tend to misappreciate is the importance of timing.

(15:47) I’ll give you an example. (15:48) The very first fund that we ran, we had eight investments and we had one that ended up delivering over 50% annualized return to our limited partners. (15:58) I’d love to be able to tell you that I’m like this genius and we did all these great things.

(16:01) It’s just bullshit. (16:03) What we had was a really strong project that should have been in the mid-20s, a really solid project. (16:12) We bought this in March or April of 2020 when it was panic time with COVID and we got an unusually good price.

(16:20) We were able to really negotiate hard. (16:22) We sold it in March or April of 2022 when the market was at its maximum frothiness. (16:28) We just happened to get lucky on both the buy at the best possible time and the sell at the best possible time.

(16:33) Instead of us getting a 22 return, we were like a 54 return. (16:38) Understanding when someone’s had great results, you’ll want to decompose was there just a lot of tailwind that pushed them to look unusually good. (16:47) Similarly in fund one, we bought an office complex in the front of the main business center of Houston a couple of months before COVID and we lost everything.

(16:56) That was a complete loss. (16:58) Fund one, we had one grand slam, one complete loss and a bunch of base hits. (17:02) It’s going to work out to be like a 15, 16% IRR.

(17:05) It’s all going to work out. (17:06) This is why you buy a basket of things. (17:07) It’s not all of them are going to work.

(17:10) I hope that people don’t judge me too harshly for getting wiped up with an office complex right before COVID. (17:14) You just don’t get to win every single time.

Melissa

(17:18) It’s so true. (17:20) I live in Austin, as you know, and our neighbors were making 85% on their home. (17:28) They’d buy it and then Austin was blowing up during that time in 2020.

(17:33) People were buying houses for nothing and selling them a year later for double their money. (17:39) It is like you said, it’s timing, it’s the area. (17:46) Let’s talk a little bit about how one could keep up.

(17:49) Let’s say obviously you got to do your due diligence, learn about it and what you were saying. (17:55) Don’t get into something because you think you’re going to make money because if you get into it for the money, it doesn’t become fun. (18:01) If you love doing it, it’s a totally different thing.

(18:04) I fell into it, Lon, because I was working as a civil engineer building houses and seeing how much money the developers were making on these properties. (18:15) I’m like, oh my gosh, is this actually your take home? (18:18) That was in the 90s and early 2000s when they were flipping property in Nevada for buku dollars.

(18:26) That’s where I got my interest in buying and selling and renting real estate. (18:33) Then I got too far over my skis and made some mistakes. (18:39) We all make mistakes in real estate.

(18:41) None of it get out without winning some and losing some, but you have to be in the game to win. (18:50) I like the idea of the portfolio for exactly what you said. (18:53) Some are going to be winners, some are going to be losers.

(18:56) If you have all your eggs in one basket, it can literally wipe you out. (18:59) If you have your eggs in a bunch of baskets, it’s a total different risk. (19:06) I love that.

(19:08) If you could go back and tell your younger self as you got started in this space, would you change anything when you first started in this space? (19:21) Anything you would change or maybe lessons you had learned that were worthy of being shared?

Lon

(19:29) Gosh, I bought a couple of competitor brokerages. (19:32) I could talk about this for three hours on the stakes. (19:35) To grow faster, we bought a few brokerages that were competitors.

(19:39) A couple of those acquisitions really worked out well for us. (19:42) They got us into new markets, brought us some new skills and a lot of great people. (19:47) If you get an opportunity to buy some of your competitors for reasonable prices along the journey, that can be a really great growth accelerator for you.

(19:54) We bought one that was just a complete disaster. (19:58) What I didn’t appreciate is that the culture of that company was just completely oil and water different from ours. (20:05) It was just unhappy and unpleasant.

(20:08) I actually go back to the two sellers and said, you’re going to have to buy this back because it’s just not going to work out. (20:14) I gave them a bunch of cash to unwind the deal. (20:18) That was better than us trying to make some work that didn’t work.

(20:22) Make sure that it’s not just the geography and the strategic logic of it that is a good fit for you as an acquisition, but that the people that you’re getting with your current culture base, they’re going to at least be somewhat compatible. (20:37) Most of the acquisitions I did, that wasn’t a problem, but man, we got bid on one of them. (20:41) I guess I’d be careful of that.

Melissa

(20:44) I think there’s something that you said in there that I think we should unpack a little more is a lot of times, a lot of people would get in, buy the business and figure it out and spend years trying to make the culture work or blend up or figure out how to make things work, but you realized quick that it wasn’t working and then you got yourself out. (21:06) Talk to me a little bit about how you learned that. (21:12) Was it intuition?

(21:13) Was it your gut? (21:15) Because a lot of times I find with all the M&A right now, people are buying and they’re trying to make things work and then like you said, the culture is terrible and those bad eggs affect your good eggs and distract your good eggs from doing good things. (21:31) Is there anything in there that we should unpack or talk about?

Lon

(21:36) If there’s any way for you to get access to figure out the culture in advance, that’d be a good idea. (21:42) I’ll give you an example of what I did since then, which worked out great. (21:46) It may be difficult for some of your listeners to find an analog that works, but if they can, maybe this will spark some creativity.

(21:52) I’ve written a lot of books about real estate investing and productivity in real estate. (21:58) I teach a lot of classes and that was actually one of the mechanisms that I used to just create a lot of awareness for Flyspec brokerage and then it was easy to attract people based on that. (22:09) What I’ve done for acquisition targets since then is if the owners and I get along well and we see where the overall logic work, we have a general sense like, yeah, this probably makes sense to do.

(22:22) What I’ll suggest to them is, why don’t you invite me in to each of your offices to do one class on investing, one class on real estate trends, and maybe one class on how to succeed in the down market. (22:32) It would give me a chance to meet a lot of your agents and talk with them and for them to get to know me. (22:38) From that, we can get a sense of what would the personality of the place be like.

(22:44) We’ve done that a couple times and it worked just really, really well to get an idea like, yeah, these are people I think that we would really get along well, great. (22:53) When you make an announcement that you’re making an acquisition, the initial feeling for the employees and all of your customers, in this case the realtors who work for the brokerages, panic like, oh my God, I like this owner. (23:04) They’re going to go away.

(23:04) There’s this new guy who’s riding in on a dark horse with a black hood. (23:08) He’s going to kill all of us and eat us alive or something. (23:11) Whatever the worst possible thing they can imagine, that’s what they’re gossiping about.

(23:15) It’s very helpful if you can announce, yeah, it’s Lon. (23:18) He’s been over to our brokerage a couple times to deliver classes. (23:20) Oh, I know that guy.

(23:21) He’s actually all right. (23:22) This is not something to be scared about. (23:24) It makes the transition go a lot easier.

(23:27) If you’re lucky enough to think of some angle where you could do that, man, that has really helped a bunch on the last couple acquisitions that we did.

Melissa

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(24:14) Yeah, it’s like taking somebody to dinner before you hire them. (24:19) Really understand what’s underneath the hood before you buy. (24:23) I think there’s so much to that.

(24:25) It’s like dating before you decide to marry someone. (24:29) It’s the exact same thing. (24:31) You go on some dates, you see if it’s going to work, and then eventually you propose and get married.

(24:36) But I love that. (24:37) I think there’s so much to understanding and getting clear on who you’re going to be working with and how you’re going to be working with them. (24:46) I want to talk a little bit about another book you wrote on how realtors can succeed in any market.

(24:55) I know I’ve seen a lot in my lifetime, lots of highs, lots of lows. (25:02) Talk to me a little bit about what you mean in this book with so many markets and so much uncertainty and constant change in our world. (25:11) How can investors build resilience into their strategies for investing?

Lon

(25:18) Yeah, so what we did for the realtors, and I did this in 2010, and then we redid it in 2022. (25:24) Those are both down cycles. (25:26) We took a look in the MLS and sorted it out by realtor to figure out which of the agents were increasing their market share in a pretty hostile time in the market and what agents were sliding along with everybody else in the market.

(25:39) Then we sent a survey out to all of them asking a bunch of questions about their approach to business planning and client development and time management and internal organization, business system, 50 other things. (25:50) A pattern of responses emerged for the people that were taking market share in an adverse time. (25:58) They were just a lot better at all the business fundamentals.

(26:01) Then we set up interviews with about 25 or 30 of them, both in 2010 and now. (26:06) It was remarkable. (26:07) There’s pretty much the same answers in both markets.

(26:09) I guess it shouldn’t be a surprise. (26:11) Just asked them qualitatively, tell me more about what you’re doing from a prospecting or from a client retention standpoint that you think is really working in this time when the market’s not really working very well. (26:24) Then we just took all that information and compiled it into a book.

(26:27) The unsurprising bottom line of all this is that if you just do the fundamentals and show up every day and don’t get disheartened, focus on what you can control and be excellent at that. (26:40) Then the downstream results of those actions aren’t something you can control to the extent you can decouple that and let that go. (26:49) It’ll make the journey through those valley of death periods in the market go a little bit more smoothly.

(26:55) It’s such an obvious output, but it was just really dramatic that the people who did the business leverage, they were making a lot more income and seeing a lot more growth than the people who were just like, it’s terrible. (27:05) I’m just going to pull up at the corner and cry and wait until this is over. (27:08) That’s not a winning strategy.

(27:11) I think this is also true for investors. (27:13) At every phase of the economic cycle, a different real estate strategy will probably be the most optimal. (27:20) If you like doing fix and flips or you like doing rentals or whatever your preference is, it’s going to be easier in some phases and tougher in others.

(27:28) Part of being successful through phases over time is just listening to the market, not trying to fight it and realizing that this may not be the right season for me to be doing fix and flips because there’s these three things that are against me. (27:43) Even if I am lucky enough to have perfect execution, which doesn’t happen often, I’m going to get lower than average margins that probably don’t compensate me for the risk. (27:51) Then there’s other phases of the cycle that are very much like that developer story you were telling me maybe 10 minutes ago, where these guys were in Nevada and just killing it in the early 90s because every variable was lined up.

(28:01) It was all tailwinds, nothing for headwinds. (28:04) There are golden periods of time in real estate where it’s like that. (28:07) What tends to happen is everybody’s witnesses like these guys are doing nothing.

(28:11) They’re not as smart as I could. (28:11) I could go make a killing at this. (28:13) Too many people get in.

(28:14) Suddenly, there’s too much supply and then it wrecks the market. (28:19) I guess be a little humble and spend a little bit of time studying the market so that you can make really appropriate decisions for each phase. (28:26) Your life just will become a lot easier as a result.

(28:28) Long answer to a short question. (28:30) I’m sorry.

Melissa

(28:31) No, no. (28:31) I love it. (28:32) I think it’s so true.

(28:34) A lot of times, some of the businesses that I saw fail the most in Nevada when Nevada took some really big hits in the market, they were just focused on the numbers. (28:46) It was only about the numbers. (28:48) It was only about the money.

(28:50) It wasn’t about the strategy, how we’re scaling, the people that are helping us scale. (28:55) They were only focusing on the dollars. (28:58) The companies that were focusing and had a plan and a strategy and they weren’t doomsday, the end of the world.

(29:05) Everybody’s bank account is going to go to zero. (29:08) When the clock hits 2000, I’ll never forget. (29:13) Exactly.

(29:14) I’d worked in civil engineering and they were all talking about taking their money out of the bank. (29:19) You remember those days, right?

Lon

(29:21) I do.

Melissa

(29:22) Everybody’s talking about losing all their money. (29:26) That’s what I love about what you’re talking about. (29:28) We’ve talked a lot about culture as well, which is something you don’t often hear or at least I haven’t heard a lot in brokerage and real estate.

(29:39) It’s dog eat dog and the numbers and making the deal happen. (29:45) What I’m hearing from you is a lot of systems and culture and strategy and working your plan, which is so true. (29:56) It’s such a true way of building anything you want, whether it’s your health, your wealth, or whatever you’re trying to build.

(30:06) It’s not just a transaction, but it’s a strategy. (30:10) I love what you were saying at the beginning. (30:13) I find we’re moving into a phase and you tell me, I won’t make an assumption, but I’ll get your opinion.

(30:19) I feel like we’re moving in a very transactional time right now. (30:24) Everything is so transactional, so money and dollars driven. (30:30) Talk to me a little bit about that and how companies and executives can really shift from just the numbers to more of this strategy and culture piece that you’re talking about earlier.

Lon

(30:45) Well, I think you’re going to find in most markets that there’s going to be a segment of people that are just about the dollars and the transactions. (30:54) You aren’t going to be able to persuade them to think about a basis of picking a relationship in any other way. (31:01) If you do get a relationship, you need to know that’s what you’re in it for.

(31:04) That can be fine, just don’t be ambushed by it. (31:07) But I think that the vast majority of people are more holistic in that they do value a relationship. (31:14) I think the way that you can gauge this is that the more uncertainty there is in the transaction, the more important the transaction, the more important trust is going to be in the people that help you get the transaction completed.

(31:28) Then if it’s a high trust relationship transaction, then the relationship for most people is probably going to become more and more important. (31:37) If you’re more of a relationship-driven person, being involved in markets like that, like commercial real estate or residential real estate, could make a lot of sense because for most people, that is a very trust-driven as opposed to if you’re working at the AT&T wireless store selling cell phones. (31:52) It’s a transaction.

(31:53) There’s no relationship. (31:55) It’s just, are you better than Verizon or not? (31:57) It’s a different basis of competition.

(32:00) There’s a different personality type for each segment. (32:03) No matter what your personality type is, you can find a battlefield that you can win in, but just try to make sure that you’re not trying to take a set of skills and a set of preferences about how you want to interact with other people into a battlefield where what you are good at won’t be valued because it’s just going to be an awful day for you. (32:18) I don’t know if I’m getting to what you’re asking for or not.

Melissa

(32:20) I think it’s spot on. (32:22) Then the second point is just, I love what you were talking about, diversification. (32:28) I think there is going to be market changes.

(32:31) We’re at a time when technology and AI are changing a lot of what we’re doing, which is affecting the market, the market conditions. (32:39) We see a lot with politics and inflation and everything that’s going on in the world. (32:45) I love what you were saying at the beginning, diversification.

(32:48) I think that wins in all capacities from my point of view. (32:54) In closing, any other final thoughts or anything that you want to leave with our listeners that we didn’t touch on today?

Lon

(33:05) I’d like to offer you guys a copy of our book on passive investing. (33:10) If you go to irontoncapital.com, forward slash guide, you can download a free copy of the book. (33:20) For those of you who have thought about passive investing, but you’re not really sure what all is involved, what questions to ask, what are the risks and the rewards, how would I explain this to my family, how would I talk to my financial advisor and my CPA to get counsel from them to see how this could fit in?

(33:37) This book covers all those topics. (33:38) It was really written from the point of view of someone who’s brand new to passive investing, likes the idea of getting more exposure to real estate, but doesn’t know how to start. (33:46) irontoncapital.com forward slash guide. (33:48) I hope that will be a great resource for you. (33:52) I was lucky enough that early on in my career, I had a couple of people really give me a lot of great investment advice. (33:57) Honestly, I’d do that for all of you guys too.

(33:59) If you want to book 10 minutes with me and just do that, shoot me a text 303-619-0633. (34:08) I’ll set up a 10 minute time to talk about what your goals are, where you’re at, and I’ll try to give you some direction. (34:13) If I could spend 10 minutes on the phone and save you three years of wasted effort, it’s really worth it for me to do that.

(34:20) Don’t feel bashful about taking me up on that.

Melissa

(34:23) I love that you did that because man, I’ve paid a lot of dumb tax in real estate and I sure wish I had a phone number and someone to talk to about it. (34:33) Take them up on that. (34:35) What is the best way for outside of the phone number for our listeners to connect with you and what you’re doing?

(34:44) Is it social media? (34:45) Is it an email? (34:46) Is it a website?

(34:47) Give us the details.

Lon

(34:49) Yeah, you go to irontoncapital.com and you can get a list of our different investments that we offer. (34:55) We have a lot of training classes. (34:56) Pretty much every Tuesday at six o’clock, we’re doing some sort of a webinar.

(35:01) So for a lot of you, what probably would be most relevant as a next step is we do a national real estate and economics trends class every month. (35:11) So if you’ve thought about investing or maybe you’ve already got some investments, you’re just trying to evaluate what should you do next? (35:17) We’ll talk about what’s driving interest rates.

(35:20) What are the risk factors to the economy? (35:22) How are different parts of the doing from a supply and demand balance? (35:25) And what does that mean for future appreciation?

(35:28) If you’re a buyer or a seller, who’s got the negotiation advantage, how do you exploit that? (35:32) Just we try to talk about a lot of actionable things that if you’re thinking about buying and you’re building a spreadsheet with a bunch of assumptions, you’re not sure like, well, what will rent growth be? (35:40) What’s going to happen to vacancy rates?

(35:41) Like we’ll give you a lot of facts so that when you put a number in there, you’ve got like something to back it up. (35:46) You’re not just picking a number out of the air. (35:47) So I hope that would be a benefit to a lot of your listeners.

Melissa

(35:51) Yeah, that’s great. (35:53) Thank you so much for that. (35:54) I really appreciate you taking the time to share your knowledge and insights with our listeners today.

(36:01) That’s the Executive Connect podcast.