As part of my series about the “Five Things You Need To Be A Highly Effective Leader During Turbulent Times,” I had the pleasure of interviewing Nick Ron.
Nick Ron, CEO of House Buyers of America, is a tech-savvy industry veteran with over 20 years of experience as a real estate investor. Since 2001, Nick has bought 1,000s of homes in the Washington D.C. Metro area through his hybrid real estate model that balances technology with human, on-the-ground expertise.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
Right out of college, I started working full-time for CACI in technology sales and business development. In my 3rd year at the company, I brought in half of the new business on a 12-person team. I did not anticipate starting my own business until I read Rich Dad, Poor Dad, by Robert T. Kiyosaki. This piqued my interest in real estate. My success at CACI built up my confidence in my ability to lead and run an organization. My degree in economics and technology from George Washington University gave me a good baseline for using tech in business. In 2000, I began studying real estate and immediately dove in. I founded House Buyers of America as a side business in 2001 while I worked full-time at CACI. I would get off work at 5 pm and then run my real estate business until 10 pm. During this time, I learned the rules of real estate by becoming a student in the industry. I talked to everyone in the business; agents, brokers, investors, and title companies. By doing this, I realized my technology experience could bring a fresh perspective to an industry very set in traditional ways.
From this point on, I charted my own course and learned as I went. I began purchasing rental properties. After six rentals, I fell into quick-turn properties — buy, renovate, sell. In the first year, I did around 20 houses, the second year — about 100 houses, and the third year — over 250 houses. Our revenue skyrocketed from $0-$50 million in the first three years. Before I quit my full-time job, I had one employee, and we worked in my basement. When I got to the point where I was making more money part-time than full-time, I left CACI and dedicated my time to House Buyers of America. Once I went full time, our growth really began to explode.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?
The first office we rented was in a mixed-use commercial space. Our office was on the top level. My team would go into the office early in the morning. Since we grew so quickly, we took up all the parking spaces before the other tenants got in! Retail shops in our building would get upset that there were no parking spots for their customers. Some of our folks would park across the street in the Post Office parking lot, and some would get towed. We then moved to a bigger space that allowed for over 100 employees. We had expansion plans in different cities but then realized we overshot with our headquarter office space and did not need this big of a home office. I needed space in other cities. I learned if you need more office space, you can find it when you are ready.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
Absolutely! I took advice from so many people. My Pastor, Lon Solomon, always provided solid guidance to keep me well-grounded in life. He taught me how to avoid landmines in life, whether it was business or personal related.
The second person who helped me achieve success is my friend, Mark Gottlieb. He is a respected entrepreneur who invented many cool consumer and healthcare products and ran a successful business for many years. Mark was there for some of the challenges I faced early on in my company. He has been there and done that, so he gave creative, insightful feedback on overcoming obstacles.
Extensive research suggests that “purpose-driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
My vision was to reinvent the real estate industry. We wanted to be the Amazon of real estate. This meant fundamentally changing the way real estate was traditionally done by offering an innovative alternative and leveraging technology. Our purpose was to make the process quick and easy for buyers and sellers. We always remained energized and focused on our vision by continually upgrading our technology and studying the market to serve our customers better.
Thank you for all that. Let us now turn to the main focus of our discussion. Can you share with our readers a story from your own experience about how you lead your team during uncertain or difficult times? What are the top two lessons learned through it all?
We lived through the 2008 Great Recession. That time-period could not have been worse for real estate. We literally went through two years of hell, and do not ever want to go through that again. We learned everything we could have from this experience. We operated on sound principles that helped us get through future downturns with flying colors.
One of the biggest lessons learned was to be conservative. Apply Murphy’s Law when it comes to finances. There was no crystal ball to predict a market crash, and there isn’t one that will predict the next one. You must keep your debts low and have strong cash reserves to be well-positioned before the downturn to weather the storm.
The second lesson learned was to always strive for excellence and continuously improve your business. Every day watch your costs and keep tweaking your process to maximize efficiency. When a downturn hits, this becomes a way of life. If you operate on tight margins in a healthy market, you will never survive a downturn. Operate with extreme efficiency and always maintain healthy margins!
Did you ever consider giving up? Where did you get the motivation to continue through your challenges? What sustains your drive?
We had tough times during the 2008 financial meltdown, which went on to last several years. It was hard, but we adapted quickly. We were conservative compared to other investors who ran out of cash or went bankrupt, so we could take advantage of the massive amount of foreclosures and sold those houses. However, I never thought seriously about quitting. My faith teaches me that God is with me at all times, in the good and the bad, and He’ll help see me to the other side. But honestly, with four kids and a wife to support, failure was NOT an option. I could never quit and let them down. So, if I had to work 80-hour weeks to get through the tough times, then so be it. Additionally, I wanted to continue our philanthropy work through my church and Compassion International, where we sponsor children internationally. I could not give up on them.
What would you say is the most critical role of a leader during challenging times?
The most crucial role of a leader during a challenging time is to lead with a clear plan. Communicate the plan to employees and follow through with the plan. Transparency builds confidence and eliminates fear. Employees know when there are tough times, there’s no sense in sugar coating it. They won’t be concerned about the struggles if they know you have a solid plan, and you are executing well on that plan.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate, and engage their team?
During uncertain times, share the good news as often as possible. Small achievements are significant. Let everyone know when another deal closed, or a new goal was reached, celebrate successes as often as possible!
To keep your team engaged, you must continuously communicate. Be honest that times are tough. By acknowledging the whole industry is suffering, you are educating your team on the bigger picture. This motivates everyone to hunker down, lock arms, and get into the ‘A-Game’ mindset. Let them know that they aren’t just helping save their own job, but the jobs of people who work around them.
It is also essential to be honest and help your team understand why the industry is uncertain. You will build confidence if the plans you set in place unfold successfully. When you honestly communicate the plan, your team will appreciate it. Do not tell everyone, “I’m going to save everyone’s job” when you know that’s not true. Be honest and let them know there might be some pain down the road, but we’ll get through it as a team. Often leaders try to keep people calm by painting a falsely rosy picture. Always be very careful and honest, that will pay big dividends over the long haul.
Try to do fun things! During successful months, offer bonuses or even small gift cards if finances are really tight. When business is going well, celebrate with team happy hours or team events. Take time off to celebrate key milestones. This motivates people and helps keep the focus away from the tough times, and onto the successes we’re having along the way.
What is the best way to communicate difficult news to one’s team and customers?
Have empathy and compassion when delivering difficult news to your team and customers. This will show you care and that you will be there with support to carry them through.
How can a leader make plans when the future is so unpredictable?
To make plans when the future is unpredictable, leaders must be candid about their weaknesses and the current market situation. Put down the rose-colored glasses — plan for the worst but hope for the best. A leader must get input from the brightest people in the industry and outside the industry to navigate challenging times. Leaders must get information from their team; those in the trenches often have incredible ideas and see things differently.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
Be humble and ask for a lot of advice from everyone and everywhere. Realize your own weaknesses and blind spots and have others around you who can help you see those blind spots. For me, my faith is always the thing that gets me through, the rock that I stand on.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make during difficult times? What should one keep in mind to avoid that?
- I have seen businesses mistake jumping into a different business during tough times because the grass looks greener on the other side. Rather than hunkering down and pushing through the tough times in the business they’ve built up strong expertise in, they jump ship and go into a different side of the business or in a different industry altogether hoping that things will be “easier.” I’ve seen many business owners do this only to realize that the other business they jumped isn’t as easy as it first appeared to be, and they have to start over from scratch, with no baseline expertise. They also miss out on tremendous growth and market share opportunities when their primary business eventually gets through the market downturn.
- The second most common mistake is overspending. It’s critical to have large cash reserves and minimal debt to get through tough times. That large of a cash cushion helps you avoid getting into desperate financial situations where you have to pay vendors late (or not at all) and have to do massive downsizing. These disruptions can set you back years from growing your company, and you miss out on great opportunities that come up as a result of tough times in the industry.
- The third biggest mistake would be not adapting to consumer needs and market changes. Continue to listen to customers and study your industry. Never get to the place where you think you know everything. Times change, customers change, technology changes. The thing that worked well yesterday may not work well today. Don’t get stuck in your ways.
Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?
The real estate industry as a whole has been behind in technology. Therefore, we have made a continuous effort to develop our technology to serve our customers better and reach new buyers and sellers. During COVID, we increased our marketing efforts to generate leads. While others in our industry were pulling back and cutting down their marketing and tech budgets, we doubled down and actually increased them, which allowed us to gain a competitive advantage with our tech and grow our market share.
Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to lead effectively during uncertain and turbulent times? Please share a story or an example for each.
1. Be Humble & Ask for Advice: Pride comes before the fall. Know your limitations and realize you have blind spots that can only be corrected by getting advice from others around you and outside counsel. People have been down the same road, so gain their wisdom and don’t try to reinvent the wheel. This is not the time to be original. Asking people for advice from different industries will give you a better perspective. With a multitude of counselors, your plans will prevail.
Example: Early in my company, I set up a board of advisors and hired several consultants in critical areas such as Business Strategy, Leadership, HR, Legal, Marketing, and Tech. I was only 26 years old, and I knew I had a lot to learn. By getting advice often, I was able to scale my company from $0 to $50 million in my first three years of business even though I had no real estate experience when I first started. I didn’t even own my own home! I avoided so many pitfalls by taking advice that was contrary to my own inclination. I realized that I would have made some fateful decisions if left to my own devices, but my advisors really helped me avoid some major pitfalls. I still made mistakes, but they were manageable.
2. Conduct Low-Cost Tests: In the first couple of years in business, I was an idea maker. Entrepreneurs are optimistic at heart. I used to bet significant money that an idea would work. Some ideas were great, and then some were complete failures. Do low costs tests to see if the idea will work. I learned over time, not all my ideas were brilliant. Do not waste a lot of money on ideas that are not tried and proven. Start with small tests, and if they succeed, then expand the concept. You may have a great idea, but the market may not be ready for it. Do not put all your eggs in one basket!
Example: During the 2008 housing crash, I saw many investors switch to only buying foreclosures and completely stopped marketing to other types of customers. These people put all their eggs in one basket. They did well for a while, but eventually, foreclosures dried up. I saw many investors/agents either go entirely out of business or have to significantly downsize their operation once the foreclosure gravy train came to a screeching halt. Diversify your business, don’t put all your eggs in one basket.
3. Persistence pays off: I saw a lot of people get out of real estate when the market crashed in 2008. Some peers went back into IT sales or others switched to commercial real estate. They had to start all over in a new career and go after a completely different customer base. The grass often appears to be greener on the other side. These people had the mindset that when the tough got going, it’s time to quit. This never made sense to me. Long-term, real estate is a promising industry. I knew it would eventually recover. If you jump to an industry because it’s hot right now, realize that eventually, that industry will have a down cycle as well. So, it’s better to invest your time honing your skills and improving your business process/strategy so you can expand your market share and position yourself when the market comes back.
Example: If I quit real estate during the 2008 market crash, it would have taken years to build my business back up. Learning a new industry is difficult, and I would not have made a lot of money by jumping around. Currently, commercial real estate is getting hit hard while the residential real estate market is on fire. My advice is to be persistent. I earned my Ph.D. in real estate during the downturn (school of hard knocks) simply because I stayed focused and didn’t quit. Now this industry is one of the strongest during COVID. Had I left residential real estate during a difficult time; I would not have been able to enjoy the fruits of my labor. Nothing worthwhile is easy; it takes hard work and dedication. The easy way rarely leads to long-term success.
4. Maintain Healthy Margins: Do not spend money you do not have. Always be cautious and conservative. Do not get into debt or try to invest significant amounts of money in unproven ventures. Start your plan small and grow each test as they yield results. Cash will get you through tough times. In the years I did well, I saved. I did not blow my money on boats and planes and expensive toys. I lived within my means. The older I get, the more I realize how important it is to be debt-free because you never know when the market will decline. Pay your debt off when times are good because your company may fall on hard times again.
Example: During the last market crash, we were able to weather the storm much better than many of our peers because we always did deals that made sense, we only did deals that had enough margin to maintain our profitability. However, many of our peers were overpaying for property during the market run, even paying over market value, not realizing that a significant correction was right around the corner. You must remove emotion and focus on numbers and logic.
5. Adaptability: Always try new things, run multiple tests every quarter to see what works and what doesn’t work.
Example: In the market between 2003–2006, homebuyers would buy any house that came on the market, regardless of the condition. When the market crashed, home buyers became pickier and demanded high quality, nicely renovated homes. At that time, we were not good at construction. I took the time to listen to customers and watched what was working. I adapted quickly and became an expert at renovating ugly houses and turning them into the nicest house on the block. That was a winning formula that worked for us through the entire downturn. Many of my competitors couldn’t shift into doing high quality renovations, they ended up folding.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
Without counsel plans fail, but with many advisers they succeed. — Proverbs 15:22
There are two types of advisors I always confide in for advice, both professionally and personally. Peer-to-peer advisors give me the ability to lock arms with those going through similar market challenges. I have consulted with competitors to ask for advice and in turn I provided my guidance to them. I’m amazed at how open people are with sharing advice, even competitors! Senior advisors are those who have the experience of navigating downturns. They have given me sound advice to weather the storm successfully. Employees and customers often give the best advice.
How can our readers further follow your work?