Where Smart Investors Are Finding Leverage in Today’s Market with Lon Welsh

Welcome to the Smart Real Estate Coach Podcast, your source for actionable, real-life, practical investing advice. Each week we help you make a quantum leap somewhere in your business, your finances, and/or your life. Subscribe, leave a rating and review, and learn more at smartrealestatecoachpodcast.com. All right, smart listeners, it's Chris Prefontaine, your host again with the Smart Real Estate Coach Welcome to the podcast. Today I get to hang out and have an open chat for you with Mr. Lon Welsh. He's the founder of Ironton Capital. He brings more than 20 years, which I know I say this almost every show because we handpick guests that have been in the business for a while, no matter what it is they're doing. He's got over 20 years of expertise in commercial real estate acquisition and development. He also serves as the founder and CEO of Your Castle Real Estate. It's Colorado's largest independent brokerage. with over 750 agents, guys. They handle over 5,200 transactions a year. That's about almost $3 billion in sales. Pretty cool. His finger on this. He has his finger on more. He also founded First Alliance Title. It's a leading title and escrow company, uh, that was successfully acquired by Compass. Since 2011, his companies have regularly ranked among Denver's fastest-growing companies, including number 6 placement by the Denver Business Journal. Okay, Lon, with that as a little backdrop, welcome back to the show, my friend.

It's great to be here. Thanks for having me.

Yeah, you bet. So, for the smart listener, Lon was on episode number 530, and that was back in September of '25. So, you're going to want to go take a peek and listen to that. And I think what would be super cool, Lon, is that we go, all right, well, what's new? What's new in the trend side of things? And What can these guys be thinking about, paying attention to, or understanding right now if you're good with sharing some trends?

Yeah, I'll tell you what I'll do is I'll share my screen here. And then, if you want to say yes to that, I'll switch that on. And we'll share all these slides with you, Chris, so you can share them with all your listeners. And then, hopefully, you know, they can get a lot of value out of this. I'll just hit a couple highlights.

And I'll tell you what, I'll say this to the listeners. You guys want a copy of these slides? Just email support@smartrealestatecoach.com and we'll make sure you get those. Tell them that Lon and Chris said I could have them. Go ahead, Lon. Super.

Can you see that okay?

Yeah, perfect.

Fantastic. I'll just go through to like, you know, some real highlights of what's going on.

Sure.

To really understand what's going on in the residential side of the real estate market and to some extent on rentals, you have to understand consumer sentiment because people who are Feeling confident and bullish are excited about doing a real estate transaction, and people who are scared tend to hunker down and not spend any money on anything unless they absolutely have to. So the University of Michigan does this consumer confidence index. That's the one that you hear about in the headlines all the time, and you can see consumer sentiment has been pretty low, and the expectations going forward is also not very enthusiastic. Why is that? Well, part of it is because of the war that we've got in the Middle East. So when that resolves, we'll probably see a bump up from that. But interestingly enough, if you take a look at this, you could see. You can see there was a huge concern about losing my job sometime over the next 5 years when ChatGPT was released. And anecdotally, we think a lot of people who have jobs that might be impacted by AI are thinking, I don't have the economic security I used to. And that's feeding into a lot of why there's this negative black cloud hanging over a lot of consumers. So if you ask people specifically, is it a good time to buy or sell a house? People who say it's a good time to buy, It's at like a 30 or 40-year low. So, that lack of enthusiasm is holding us back. So, yeah.

And sorry, Lon, if you guys have listened to this, you are going to want to jump over to YouTube and check out these, the trends and the graphs because it'll make a lot of sense. Go ahead, Lon. Sorry.

Yeah. Oh, absolutely. Feel free to chime in anytime. I'm always happy to make this an interactive thing. So, the important information for your listeners is that We talk about mortgage rates being the accelerant that we need to have to make the real estate market unlock and get more transactions. And that's part of the problem. But consumer confidence is probably actually the bigger thing, and nobody in the media talks about that. So if you're a prospective buyer, it's a really great time to be a buyer because you can negotiate a lot harder. If you're thinking about selling, but it's not required, I wouldn't sell right now. I'd wait a little bit. So, should people be negative? Well, the reality is that the economy's actually doing a lot better than most consumers think that it is. Inflation is a little bit above the target 2% for the Fed, but not by a lot. Unemployment is floating just a little bit above 4%, which isn't too bad at all. If you take a look at, was there economic growth recently? Yes, there was. It wasn't too bad. Is job growth slowing down? It is, but it is still positive. There's no reason to be overly negative about that. So, when you ask the economists sitting on the Board of Governors at the Federal Reserve, what do you think's going to happen to unemployment? They say, we think it's going to be stable. We're not worried about it. So, interestingly, you know, if you do surveys of consumers, 75% of people in America think we're going to have a recession sometime in the next 12 months. If you ask the people at the Federal Market Open— Federal Reserve Open Market Committee, those are the guys that set the interest rate for the short term. They think we're going to have economic growth over the next 3 quarters. So, I'll just pause here for a second and see what questions you've got, Chris, because I'm going a little fast on a few of these.

No, you're good on the pace. I guess my knee-jerk, if I'm listening, Lon, is the obvious, like, okay, great. Who do they listen to, right? That's always the case. So, I just wanted your take on that because you have your finger on it clearly. And I just didn't know what your thoughts are with that question. Like, all right, well, who do you listen to?

Well, I think with the consumers, I think they look at a very small scale like, am I going to lose my job? Can I afford the payment if I bought a new house or not? Am I worried about like my kids losing their job and they're going to have to move back in with me? I think it's the very, very micro that influences a lot of people's thinking. I don't think most people read the Wall Street Journal economics section each day, which I'm a nerd. I do read all that stuff. And there's nothing wrong with that. I just think you have to have a different perspective.

Yeah. Yeah. Got it.

So, what does this mean for those of you who are landlords or considering being landlords? Okay. What's interesting is that a lot of renters are really struggling economically. When you take a look at, are you having a hard time paying your bills? For homeowners, most homeowners are able to stay on top of their bills. It's only about 10% that are struggling. For people who are renters, it's closer to 27%, 28%. of renters are behind on at least one of their bills. And when you're in a status like that, it makes it very hard to amass the down payment to go become a first-time buyer. And the biggest driver of that is student loan delinquencies. It's absolutely amazing. 14% of the people with a student loan are delinquent right now. And a lot of those guys are relatively recent college graduates who should be sometime soon—

Mm-hmm.

entering the pool of first-time buyers. And that's a huge headwind that's keeping them out.

So, that looks like the highest loan since like '10. Am I right? Yeah. Yeah.

Yeah. It's actually, for student loans, it's the highest in like the 20-some-year data set that I've got here.

Wow.

So, what this means is that the pool of people who will be stuck renting is going to grow. And the pool of people who are in the first-time buyer set is going to shrink. Which means from a landlord perspective, we've got a lot more demand than historically you'd expect, and that'll put a lot of positive pressure on rents and it will really help out with vacancy.

You won't see— I want to scream about this, Lon, too. This is good because in our world with the rent-to-own, I have a celebration for the listener, but I also have a caution, and that is you're going to have an enormous pool of rent-to-own buyers. Your systems to sift through them and be careful who you put in a home are going to be super important. And I'm biased, but my son Nick, for what now, 12 years, has perfected those systems in the pre-qual route, let's say. So just be very careful, but be optimistic about what you get to pick from. Go ahead, Len.

Well, you should find, particularly if you're doing a rent-to-own home, you should have a larger pool than typical because There's not as many rental homes as there are condos and traditional sorts of apartments. And as renters get older and older, let me show you this great stat. Average age of a first-time buyer is now almost 40.

Wow.

So, someone in their 30s doesn't want to be living in an apartment where they've got to like walk up 6 flights of stairs carrying their groceries, walk down 6 flights of stairs and let out their dog, go back up the flights of stairs. And it's just, they want to have a house. And if you've got a rent-to-own house, that's going to be extremely appealing to them. You should be in a position of power from the negotiation side.

Love it. You know, it doesn't matter if you're brand new to real estate or if you've been doing this for several years or a whole bunch of years. I learned the hard way back during the crash that doing creative deals is much better. It's a much better path in real estate in general than, let's call it, the old way— getting paid once, using banks, signing personally. 3 paydays, getting paid 3 times on a deal. It's better 3 ways, not one. Money now, money over time, and money long term. And I don't care if you're in an up-down sideways market, it doesn't matter. You can and should operate with the utmost confidence. There's literally nothing I love more than helping people create systems and simple systems and processes to become massively successful with our 3 Payday System, and doing so in literally any market and doing it geographically literally anywhere. So if you've been learning and learning and listening and studying and not taking action, I'm telling you after going through it myself, it's costing you tens of thousands if not hundreds of thousands of dollars by not taking action on the 3 paydays the way you should be getting paid. Many of the people that were brand new, just like you, that joined our community have fast-tracked their startup. Now, I mean, wouldn't that be ideal? If you said, okay, should I go fast or slow? Should I take action now or later? It's costing you too much money to wait. Each one of you are at a point in your life, I'm sure, where you want things to be easier, you want things to be better for you and your family. You probably realize that you not only want more, but you deserve more. in this life. So, to be able to give your family everything they want, build a legacy for you personally too, and to have time freedom to start enjoying life, frankly, whatever else you're seeking. And for some of you, now's the time, for example, to just focus on security. Maybe it's building a big solid bank account for retirement. We take these things super, super seriously, and it's my life's biggest reward to help you achieve them. I want to give you a free discovery session with our team. It's free. It's 15 or 20 minutes. You have zero to lose and everything to gain. And to understand how you might fit into the 3 Payday System that we've done now in over 80 markets as of this filming, go to smartrealestatecoachpodcast.com/discovery for a free call with our team. smartrealestatecoachpodcast.com/discovery. Because it's not whether or not you can do it or whether or not you fit. You can do it. It's whether or not you'll take action and do what it takes. And we can guide you through that process. That's smartrealestatecoachpodcast.com/discovery. We'll see you soon.

All right, I'll, uh, just do a couple really quick national trends. Um, if you're in one of these markets, you're going to find that these are the softest markets in the U.S. on the residential side. So if you're a buyer, you should be able to push really hard. If you're a prospective seller, I'd wait at least 6 months or a year if I could, just so that you've got a stronger hand for the negotiation when that comes up.

Let's read those for the listeners just for the heck of it because that'll be a nice high level.

Yeah. So, here's the top 10 soft markets: Portland, Oregon; Phoenix; Denver; San Antonio; Austin; Dallas; Indy; Tampa; Jacksonville; and Orlando. So, I'm going to skip through some of these slides, but you guys will have all this data if you want to download it. The macro thing about which markets are doing better or worse, generally speaking, the Midwest and the Northeast had more price appreciation in the last year. Illinois, for example, 6.9% appreciation. New York, 6.8%. Very strong. Generally speaking, the Southwest and the Southeast fared the worst from an appreciation standpoint. So Florida was off 2%. Colorado off 1%, California almost off 1%. So what happened is the Midwest and the Northeast has had a lot less inventory build over the last 18 months. And since supply is still relatively constrained, supply and demand are relatively in balance. So the buyer does not have a huge negotiation edge in those states, and that's led to continued price appreciation. On the other hand, in the Southwest and Southeast, what we've seen is that inventories have blossomed at a very fast rate, much faster than the market can absorb. We now have a lot of excess homes that are not getting any attention. And as a result, supply is a lot greater than demand. So for the small amount of demand that is available in those states, those buyers really have the negotiation edge. So it's very much a tale of 2 markets right now, depending whereabouts in the US you're based at.

Hmm.

So Chris, I'd imagine you're coaching a lot of your guys on how to find homes that are appropriate for the rent-to-own program. So depending on the state you're in, the negotiation tactic might really vary quite a bit.

Right. No, big time. So that's why, again, all these slides are awesome, by the way. But this, this one's a cool one because— and we're not going to go through and name them, but you guys want to get a hold of this because this will tell you a little bit about— if I always say you don't have to pick the area geographically with us, but it's nice to know for sure where you're going to be maybe butting heads or be in a little bit better buy position on terms.

Absolutely. The more knowledge you have, the stronger negotiation position you're going to be in. That's true every single time. I want to talk briefly about how real estate downturns work and give you about 50 years of historical perspective because to some extent, history does tend to repeat itself and knowledge is power. So, we've really had 4 downturns in the last 60 years. In the early 1980s, we had very high unemployment. Very high inflation. The Fed had to raise interest rates quite a bit, and mortgage rates for a period were in the teens. Very hard to sell a house when the mortgage rate's 16%. In 2008, we had a financial crisis. The reason is Congress loosened the standards for lending in about 1999. So between 2000 and 2007, we had a lot of stated income, stated asset loans that didn't require any documentation. And a lot of people were fraudulent, bought houses who couldn't afford them. And then 2 years later, there were a massive surge of foreclosures. So that was a big real estate hiccup. In the first part of 2020 during COVID you'll remember in March 2020, we had a lockdown for the entire US. We weren't allowed to show homes. It's very difficult to put anything under contract when you can't show a house. And that was a slowdown. And then we've got this current one. So those are the 4 big corrections we've had in the real estate market in the last 60 years. Let's kind of compare and contrast them, see what we can learn about it.

Let me interject there too, Lon. What's interesting is one of our biggest spikes as far as the associates putting homes under contract was the very beginning of that 2020 COVID crisis.

Oh, it was a great time.

Because they were unclear. Like, they needed a guide. They just didn't know which way to turn. And of course, the access and all that stuff. So, that's why I always scream about creative. Whenever there's uncertainty, a blip, a change, which is always— it's always doing this. But whenever that's happening, that's an opportunity. So it's interesting.

This is an exceptional time to be a buyer, particularly with creative financing, because you can have owner carry of someone who might have a 3% mortgage locked for 30 years. And if their house has been sitting there on the market for a while, they might be very interested in talking to you if you can bring them a creative solution. That would not have been true in 2021 when they would, they wouldn't even entertained the idea.

Right.

So this is a great time for your listeners right now. So just very quickly, how much did the number of home sales drop from the peak to the trough in each of these corrections? In the early '80s, when we had really high interest rates, it was a 50% drop in unit count. In the 2008 crisis, when we had lots of foreclosures, 51% drop in unit count. COVID was very short. That was only like a couple-month window when we weren't allowed to show homes because we were locked in our homes. So it was only a 27% reduction in count. This time around, we're off about 39% from the prior peak. So not quite as severe a correction as the 2 big ones, but not off by much. How long did those prior real estate slowdowns last? The answer is 4 years and 3 years, and we're about 4 years into this one. This one's going to drag on for a little bit longer. I can't prove it to you, but my— I would bet you guys a cup of coffee that this time next year, if we sat down, we'd find that 2025 was bottom dead center. This year, '26, will be a slight recovery, and '27 will probably be even better yet. It'll take a year or two after that to get back to our prior high, but we're already on the upswing part of the cycle in most markets. So, from a buying standpoint, this is actually a very opportune time, I believe, in most geographies.

Yeah. Kind of like, I'll use the word urgency, right? Because In our world, if you get out there now and double down, you probably are going to parlay with the 3 paydays, man, enough for like 5, 7, 10 years of income if you do it right, you get after it right now.

Yeah, it's an incredible opportunity. So, I frequently hear concerns about will prices drop from prospective investors. So, I want to just address that really briefly. So homes are supposed to go up about 1% in value this year on average. That's probably about right. So home equity value, I want to talk about that. That's probably the easiest way for us to express this. Here we go. So when you look at this chart, you can see that the equity value in all of the homes in America Currently is about $32 trillion. The composite value of all the mortgages outstanding is about $13 trillion. So we've got $17, $18 trillion worth of equity across all of our houses. In fact, 40%, approximately, of the homes in America have no debt whatsoever. So I want to compare and contrast this to 2010, at the center of the hurricane of the great financial crisis, when we had a tsunami of foreclosures across America. In 2010, the average value of all the mortgages in America was higher than the average equity. So, on average, the typical home in America then was underwater. And that's why we had this huge number of foreclosures in 2007 through 2011. Nothing right now looks anything at all like the financial crisis of 2008. So, I think it's extremely unlikely. We'll have a repeat of the situation where we see a huge decline in prices. So I do have a great chart which you guys can get from the download showing where is the negative equity concentrated at for the very small amount of foreclosure activity that we will encounter. It's going to be highlighted in just a couple of markets in Texas and Florida. Most of the rest of the US has almost nothing. It's a rounding error. of foreclosure, of homes that are underwater in their value. So for those of you guys who are flexible about your geography, that might be one more thing for you to take a look at. So I think I'm going to let it go at that for today.

I love it.

I'll give you a lot of good content there. Let me show you one thing here. Oops, at the end, I pulled up—

Yeah, you saw me scribbling notes because these are all like, There's some really cool high points in here for being in creative right now.

This is helpful. Oh, it's great. So, if you guys go to our website, irontoncapital.com/smartrecoach, like smart real estate coach, you could download a free copy of our book on passive investing. Most of you guys are going to want to be active investors doing rent-to-own following Chris's strategy. But you might have a friend that says, gosh, I'm really excited about what you're doing with real estate. I just don't have the time to do what you're doing. Is there something I could do that's hands-off? This book shows you the map of all those possibilities, how to do the due diligence, who you need on your financial team, what questions to ask, gives you the whole blueprint for free. Love it.

I really appreciate that, Lon, because this is good timing again for that as well. I told you I had one of our associates reach out just last week asking about you. And so, I hope that others see that we value what you do immensely. That's why you're back on the show. By all means, you guys, if you're in the passive mode, this is a great, great avenue.

Excellent.

Lon, anything kind of 10,000-foot view that we didn't touch that we should throw out here before we wrap?

Well, I'll tell you what, it's really interesting. I was trying to do a lot of classes in 2010 and '11 telling people that, you know, the average real estate price in Denver had dropped 25%, but for small condos, they dropped 50% to 70%. I said, you know, You don't need to know if you're at the market bottom or not. When something is 60% off of what it was before, it's time to buy. And the people who did, those assets tripled in value over the next 8 years. This is also a very good buying time. It's not going to be as dramatically good as 2010, but I can promise you there's going to be a lot of people in 2028 and '29 who are going to look back and say, why didn't I buy more assets in '25 and '26? And you don't have to be one of those people. You can take action today.

Yeah. Don't get caught saying, I should have, right?

Yeah.

No, that's not a good thing. No more shoulding. All right, Lon, I appreciate you being on again. And I absolutely want to do the encore every— whenever it's appropriate statistically, because this helps everyone in our community and elsewhere, right? So, yeah, I really appreciate it. Thanks again for being on.

Thanks for having me.

Okay, guys, that wraps up our time together today with Mr. Lon Welsh. As always, I want to give you guys some action items. If you are a new listener and you have not got your hands on our free books, feel free to go to 3paydaysbooks.com/podcast. That's the number 3 numeric, 3paydaysbooks.com/podcast. Those are hard copies, guys. They're not electronic versions. And we do not ask you for $0.10 for shipping like most free, quote unquote, offers do. Those are yours. They're our gift to you. If you have not gone through my master's class yet, it's also free. See, I'm big on free. If you haven't heard me say this on past shows, because you are getting bombarded by people on social media, and a lot of that stuff you're getting bombarded with is or by are by people that term themselves or coin themselves as a coach because they have a big Facebook following or a big Instagram following. They haven't done crap in the field. So I want to get you as much free stuff as you can. So you can understand exactly what we do and see if it's a fit for you. My master's class is less than 30 minutes or right around 30 minutes. Go to smartrealestatecoach.com/masterspodcast. It's yours for free. smartrealestatecoach.com/masterspodcast. Make it a great week. We'll see you next week on the next Smart Master's Class. Be sure to rate, review, and share the episode with everyone you care about. Make it a great week. All right guys, super cool announcement. On the 27th through the 29th of September, we have our 3 Paydays Live. I'm talking no gurus there, no fluff, just a proven system that builds wealth, literally. Join us on this 3-day event, guys. It's in person, there will be no virtual. We're going to show you literally step by step how deals are constructed, how we negotiate and solve challenges for sellers, and how we close those deals without banks or credit. Super important when I came out of the crash. You'll see real deals, real numbers, and exactly how the 3 Paydays model creates multiple streams of income from just one deal. I'm talking averages of $45,000 to $350,000 per deal, all 3 paydays. Just one or handful of these can change your year, guys, and certainly create a total breakthrough by the year 2027 for you. You're going to leave this event super clear and confident about how to speak with sellers, how to structure offers that are win-win, and how to think through deals literally in real time. We've made some really cool adjustments this year too. We've built in hands-on workshop learning experiences and extended the Q&A after each section and some other really cool experiences so you can actually do deals when you leave, not just conceptually understand it, but do deals. And lastly, we've removed all outside speakers back to our roots, just the family team. You're going to hear from people who have recently closed deals and how they made it happen. And that's important because association with others And proximity really, really matters and can and will change your trajectory. If you're serious about totally replacing your income or adding a really cool supplemental income and building some long-term wealth, this is where it becomes real, guys. 3 Paydays Live. It's led by our family team and our coaches, all who are in the trenches every single day, every single week. Again, no outside speakers selling you stuff. None. Just go to 3paydayslive.com/podcast. Podcast to learn more and to claim your spot. We'll see you there. All right, thanks for tuning in to the Smart Real Estate Coach Podcast. If you got value from today's episode, guys, be sure to subscribe so you never miss a future episode. It literally takes one nugget to access some of the things we're doing, and when you're talking the amount of— the size, rather, of the paydays, it's an opportunity cost that you can't let go. So don't miss an episode, and for goodness' sake, share it with someone who needs to hear it. If you're ready to find your best path for getting started on your real estate investing journey in general, head over to smartrealestatecoach.com/getstarted. We're going to help you take the guesswork out of your next steps. See you in the next episode.