Scale Your RE Business Faster Through Online Content Creation with Spencer Cornelia

You can't dictate the market on your own. If the market's saying that these what houses are trading for and you can't afford it, then tough luck.

It's because everyone else wants to buy those houses. It's very unfortunate.

Like I'm very on the line of thinking that everyone should be able to afford starter level home, but they're not building starter level homes anymore. And so maybe real estate isn't for everyone.

What is truly passive income and how hard is it to generate? On this week's episode, we sit down with my good friend Spencer Cornelia, a full time YouTuber, world class house hacker, and failed house flipper.

We talk about Spencer's journey into real estate investing, his amazing success with renting by the room, house hacking, his disastrous experience with long distance house flipping, and a candid conversations about the trials and tribulations of being a full time youtuber. Welcome to the Truly Passive Income podcast. I'm Neil Henderson.

And I'm Clint Harris.

Our guest today is my old friend Spencer Cornelia, who I know from way back when we used to live in Las Vegas and we were just a couple of young pups when it came to real estate investing. We had a great group that used to meet on Sundays at a coffee shop. People like Alex Felice, Ryan Panetta, Spencer Cornelia, me.

We still have a great group, it's just few people tend to move away, unfortunately.

I know Alex is in Maui, I'm in North Carolina, Gary Crawford moved. What about Mache? Is Mache still in Vegas?

Yeah.

Okay. Yeah, well, Maciej kind of drifted away anyway, so we don't. He became a crypto bro, didn't he.

Did well with it.

Yeah. Well, good for him. So we wanted to bring you on here for a couple of reasons. We were chatting before we got started. Is that one.

Like a lot of us, we all kind of get into real estate investing and have a lot of stars in our eyes. And there's a lot of people who make a lot of the strategies that people do with real estate sound very easy.

And they're not as easy as they sound, especially on the active side. And then also you are what I would consider one of the world class house hackers out there. And we'll talk about that.

And then you're also a YouTube star for our people who don't know that. And you have a really unique niche in there that we're going to talk about as it relates to passive income as well.

So, Spencer, let's start off and let's Talk briefly. Give me the high level overview of sort of how you got into real estate investing, and then we'll get into sort of the good, the bad and the ugly.

You do the math, it's less than $200 to live. And I was like, wow, this is like a hack. And this was right when the house hacking idea was starting to get hot on bigger pockets.

And so being able to implement it and then hear them talk about it, that's it really solidified this idea of house hacking. So right from the start I was like, man, I need to do more of this.

So house hacking was your first strategy, really, even without knowing it?

Correct. Yeah, I thought it was really efficient way to live for cheap. Like my whole goal was trying to live for free somehow.

And before I even heard about house hacking, I, like tried to figure out how I could do that. So then when they were publicizing this idea, it finally put an idea in my mind and it matched what I was trying to figure out.

And so then meeting Gary a couple years later and figuring out you could do it on an extreme level and actually cash flow while living in a house was a bizarre, bizarre thought. But it ended up working out.

Yeah, you were also, to this day, you're one of the most financially disciplined young people I've ever known. You always struck me as somebody who I couldn't believe how like, really, Spencer, you took the bus here because you wanted to save money?

I mean, of course I think you'd lost your car at that point, but. No, and I don't mean to make fun of you, but you were incredibly frugal because you knew the more frugal you were, the more dry powder.

You had to do the things that you really wanted to do.

What's the quote that you're either driving away from pain or driving toward pleasure. It wasn't so much pain. I don't want to romanticize it, but I really wanted to figure out a way to leave my job.

I didn't like the idea of being in corporate America for the rest of my life, which is generally the intro story to most real estate investors. Right. And I didn't have a terrible job. It was fine. Had a good job and a good career and everything.

But I just didn't want to work the rest of my life in a corporate office. So I was like, how do I get out of this as quickly as possible? And so I saw that real estate as the best way to do that.

Your job at the time, your W2 inch job in Oakland, California, you said was what, $32,000 a year?

Correct.

Did it go up when you moved to Las Vegas or was it.

Basically, it did, yeah. I ultimately made $45,000 a year.

And so with the cost of living difference, that's pretty significant and the difference in taxes, so it was a pretty big leap. But I also changed careers, so that was the catalyst.

Gotcha. And when did your strategy start to expand as it comes to real estate?

That was when I met Gary at one of our meetups. Gary Crawford. Yeah.

And he's like, oh, I got this seven bed house that I renovated and I live in it and I bring in 30 something hundred a month and I spend this much and I'm like, wait a second, you're cash flowing $1,500 a month. While living in it, from a pure numbers perspective, I was intrigued. And so right at that moment I was like, I got to figure out how to do this.

Yeah. Gary was a wholesaler, correct?

Correct.

And he still is. He's very talented wholesaler. He's one of the best I've ever known personally.

He had acquired that property and as I recall, he seller financed it to you because chances are you weren't going to be able to get a loan for a seven bedroom house on your own. Correct, Yeah.

I haven't been able to influence the loan industry to qualify someone based on the income potential from renting by the room. So the six other tenant income didn't qualify. So yeah, I would have been able to qualify for a loan.

So we had to do a, what's called a lease purchase agreement.

Gotcha. For people who don't know, there is now a program in place through Fannie Mae and Freddie Mac.

The bank will give you credit for the income on auxiliary dwelling unit. Or if you're in a duplex, triplex or fourplex, they will give you credit for 75% of that income to qualifying for the mortgage on the house.

But as Spencer said, they have not done it yet for renting by the room.

Unfortunately, I'd be able to qualify for many houses if they did.

As far as the house hack there, where have you gone from there? You have turned that seven bedroom into more houses, correct?

Correct. Yeah. So I had the seven bed. I was living in there for two and a half years and then when YouTube income started to pick up, I was able to qualify.

Currently I have three that are rent by room and one Airbnb. So I manage 18 tenants and an Airbnb.

Wow. Sounds passive.

Hardly.

So this is a really interesting strategy. My first property in my early 20s was a house hack. It was upstairs, downstairs, duplex.

And then years later my wife and I relocated to the beach and I always remember that lesson. And we bought another duplex. We lived in one half and we turned the other into an Airbnb. Something that's very near and dear to my heart.

There's a lot of different ways that you can do it. The way that you're doing it is very interesting.

It's a single family home renting out by the bedroom, which by definition to me, tell me if I'm wrong, sounds like a young man's game. Shared space. You're managing a lot of people. There's probably a lot of personalities in and out that you have to tactfully negotiate that.

But you also found a way. One of the tougher things with house hacking is can be the way that you scale.

And a lot of times it's not thinking about the property that you're currently looking to buy, it's thinking about the one after that. And you're in a situation where even after you move out of those properties, you moved onto another one and then eventually onto another one.

It's still house hacking. It's one house is paying for itself and part of the next one. That house is paying for itself and part of the next one. You're still living for free.

The only thing is that can suck you in, right? It's hard to get out of that because it's, it's a very comfortable place to be now.

I got married, had kids and like, it starts to put pressure on that. You have to kind of get your own space.

But if you've ever been in that situation, you never, ever want to go back to having a mortgage payment and paying for your fixed overhead because you've seen the light, right? You've seen that it's possible. So the tougher thing can be how do you scale from there?

Sometimes there's economies of scale that get a little bit tough in terms of debt to income ratio and things of that nature. So how did that process work for you?

Do you think that that's scalable in the long term for you or were you looking at other asset classes from that point on?

I don't think in the future because I don't know what's going to happen. Like, Neil's been around me for a long time.

Maybe my life is unique, but just in my experience, I look at like, oh, here's what I'm going to do next year. Some massive Mike Tyson level punch hits me in the face. My life just changes drastically.

And so all I do is I try to think about the next three to six months. Right now, YouTube is my focus and I've had a setback tied to YouTube that has financially strapped me quite a bit.

So I haven't really even been able to think about I'm going to buy next. So I actually don't know if that money from the lawsuit comes back to me, which would be somewhere around 300,000.

The better question is how would I allocate that? I think seller financing is the only pathway forward. I don't foresee myself ever trying to play by the bank's rules anymore.

I'm very influenced by Pace Moriby and I've seen what he's done and his community has done and it's pretty fantastic.

And so I think right now the best opportunity is rent by room on a seller financing deal, which I would certainly pursue if I were to earn that money back. How would I scale it? I think the key is having an employee. That's at least my perception is once you have an employee, then you can manage it.

Seller financing means you don't have to worry about debt to income and qualifications. And so that's at least where my head is at now. The big question is, can I apply it?

So whenever that day comes, whenever I can start pursuing more deals, then we'll see what happens.

So you've got the seven bedroom over near the airport that you were living in before, that is now, is it cash flowing?

It's a solid cash flow. The big thing for me is the tax benefits. I did cost segs on all these. So you could argue that the real moneymaker was the cost, the tax savings.

But from a cash flow perspective, it does pretty well. Yeah, and then another 400, 500amonth from pay down, mortgage pay down in terms.

Of your ability to manage it. And from a. Well, let's not call it a passive standpoint, because it's obviously not. There's nothing about owning rental properties that's passive.

But from that standpoint, how much more laborious is it to have six or seven individual tenants versus one master tenant for the whole property?

I haven't done the one master tenant managing it strategy yet, so I can't tell you exactly. I've built the culture in all the houses pretty well, such that it isn't that time consuming at all.

The biggest time consumption for me is finding a new tenant whenever that day comes. But I've kind of branded myself well enough that I'm the rent by room guy.

And so by pure luck, both on YouTube, like people reach out to me on Instagram who watch my YouTube. I've had probably four or five tenants in the last year or two that are from YouTube. And then referrals are a big one.

Once people move in, they oh man, I love this. By the way, next month I've got a friend moving to town and it just so happens one of my tenants will move out.

And it's worked out that way, but from a time and energy perspective, it's actually pretty low.

Talk about sort of a strategy that Clint and I are both Familiar with, which is short term rentals. How does it compare to the management of a short term rental?

I absolutely love my str because I have a manager for that. So I can't speak on self managing. That one is purely passive because I mean, for the most part it's like one email a month that I have to tend to.

That's about it.

Gotcha. Gotcha. You've got the seven bedroom, you've got the one you're living in, you've got the short term rental. Is that the only properties you own?

And then there's a fourth one that I don't occupy that I did. It's a six bed right now.

Okay. Did you acquire that one via seller financing as well?

No, no. So the last three have all been through a traditional lender. Okay, that was 5% down, owner occupied.

Gotcha. You've done the 5%, owner occupied to get into the properties and then how often are you able to do that?

Well, I'd love to do it every year. Unfortunately, I'm not financially in a position to do so right now. But yeah, October, November, my plan was to then do it again.

This current property was 10% down. They wouldn't allow me to do 5%. So 5 or 10% down. But yeah, if I had the funds, I'd try and do it again.

So my question is, how often do they. What does FHA or Fannie Mae allow you to do it? Is it once a year?

I would imagine so, yeah. By definition it's once a year. I think it also comes with. You need to kind of upgrade in some capacity.

If they need to tell the story to Fannie or Freddie the lender, that is the mortgage broker. But I haven't ran into that issue yet. I can't speak from experience.

So housing is expensive right now. There are an everyday. You go on YouTube or TikTok, there are millennials, everyone.

Not just millennials, but people complaining about the cost of housing right now. Housing's unaffordable. You can't do it. It's not possible for me to buy a house right now.

I hesitate to wade into that because I hate getting yelled at by people online. That's just something I probably need to get over. But I try and tell people, look, you got to think different. Like it sucks.

Yes, housing is expensive right now. It's not fair. That's not your fault. But the reality is, and Clint hears me say this all the time, it's your responsibility to figure it out.

There's no Superman coming to save you there's no like Superman that's going to come in and sprinkle fairy dust and suddenly the housing is going to be affordable. And so I always tell people, listen, like, look at house hacking.

I'm not saying it's easy, it's not a lifestyle for everybody, but everyone just keeps thinking in that mindset of oh, I just want a single family home, it's all in my house and have my own yard. It's like, okay, well a lot of people want to do that.

But if you can, look, if you can buy something that's got an auxiliary dwelling unit or move into a duplex, triplex or fourplex and not saying they're easy to find, but you're going to be able to qualify for a probably a bigger mortgage than you can with a single family home. And you can probably get in 4 or 5% down because it's still a single family home and it's going to be owner occupied.

So what advice do you have for people that are your age and maybe a little younger that are just tearing their hair out trying to find a house to live in about what they should do?

Seek other income. I actually think it's more beneficial to try and find other income sources and grow $250,000 a year inc. Income and then worry about housing prices.

If you have to stick to real estate, then seller financing is going to be the only way. I think that is the way everyone should pursue.

I know it's a little more challenging, it takes more effort and not everyone's trying to become a knowledgeable real estate investor. I'm with you man. Like you can't like dictate the market on your own.

If the market's saying that these are what houses are trading for and you can't afford it, then tough luck. It's because everyone else wants to buy those houses. It's very unfortunate.

Like I'm very on the line of thinking that everyone should be able to afford starter level home, but they're not building starter level homes anymore. And so maybe real estate isn't for everyone.

I think you make a really unique point there that a lot of people focus on. With the prices of housing going up or a lot of expenses in life going up, groceries and everything else, a lot of people are focused on saving.

The reality is my personal opinion, and I tend to get on a soapbox about this, but I think the ability to save our way to retirement has been taken away from my generation. I'm 40 years old. I think my parents and my Grandparents could save their way there, there were pensions, housing was more affordable.

There were a lot of factors, but I think that's been taken away from our generation. And currently with the rate of inflation, most people are focused on saving right now and trying to do whatever they can to save.

The reality is, as fast as you can put dollars away, the values of those dollars are being eroded in your savings account faster than you can add more to them.

So I think you make a really good point of the same mentality that I have of if I don't have the ability to save my way to retirement, I have to get aggressive and go on the offense in terms of investing to create passive or residual cash flow to get me there. It's the same concept of what you just said.

It's just understanding that decades earlier is if you're not going to be able to save your way to a down payment for a house, because faster than you can save the 5 or 10 or 20% for that purchase, the purchase price is going up so fast you can't get there.

The only other way to think about it is is on the offensive and look for ways to create other cash flow for yourself, which is easier to said than done. Right? It's easier for us to sit here and talk about it.

That having been said, I know that you have amassed 492,000 YouTube subscribers, of which I'm one. So congratulations. You're obviously doing amazing things there.

And I think it puts you in a position to be an expert on a lot of what you do is debunking what is passive, what's not. A lot of people are selling things online. They're using the buzzwords passive income and this, that and the other.

So, Spencer, you've been incredibly successful with house hacking. Not all of your real estate ventures have gone quite as well.

And I wanted to have you go back a little bit and talk to us about some of the things that you have done in real estate that have not gone well.

And then right when I was able to pay off all my debt from that disaster, I had a plumbing issue underneath the house on Eastern Gary's house that was on a lease purchase. That turned to what I was hoping to be like a $20,000 rehab into probably $100,000 rehab. I had back to back massive, massive headaches.

Well, I remember it was Every week we were following the travails of Spencer and near long distance flips and it was just, we'd all come in and just shake our head this week what had happened. But.

So let's get into some specifics a little bit about what you can remember about what went wrong there and maybe what you would have done differently, knowing what you know now.

Definitely not having a third party and a disinterested third party going to the property and checking. I think that goes for anyone doing long distance is probably best. I mean, I was so stupid not to do it. Unfortunately, I took a massive risk.

That doesn't mean you can't do it like some people do out of state flipping great. But to do it on my first deal, that just opened me up to so many things that I didn't consider.

And when you're a newbie, there's like no way to really reduce the risk. You're just signing up and then you're just hoping it goes right.

And when it doesn't, it's easy to look back and go, oh my gosh, there's so many obvious mistakes.

Yeah.

The biggest one would just be have a disinterested third party because if the second there's a mistake, you go, hey, there's. You should probably hire a different contractor. You hire a different contractor and get through it. The two deals I bought were actually great deals.

Even though they took 18 months to close, had I paid cash for them, I still would have made like I think 10 to 12% on my money. So there were great deals. It's just the fact they took so long as the hard money cost is what made me lose my shirt.

But they turned out to be great properties. I think they turned out to be really nice looking too.

Yeah, no, I remember the photos and I remember, I think your last one was you had it done, it looked great. And then circumstances beyond your control is the next door neighbor was a hoarder.

There was just so many headaches with that thing, man. It took like 16 months to complete. Then we list it for sale and then we got a lot of negatives about the neighbor. Realistically, I don't think.

I think that was just them being polite and given an excuse that wasn't related to the property. Because I think there were still some mistakes with the property.

So it's 45 day close. We go through the process and there's this little virus in China starting to pick up. It might come over here.

And then they have their lenders, their agent like brings up a possible issue in the basement. They think it's a foundational issue. And I go, oh my gosh.

After a massive rehab, if there's a foundation issue, I don't even know how I'd get out of this. So we had to get a foundational expert to come over, which delayed the closing. He of course thought it was BS and so checked it off.

But that delayed closing, well then right when we were about to close, the virus starts coming over here and everything's starting to go, oh, what's going to happen? I was in a massive panic. Thankfully we closed on that property and that started the dominoes for me. Escaping the nightmare.

I think it's a great segue for what we're going to talk about here shortly is that there's a lot of people in this real estate space, surprise, surprise, that make this look a lot easier than it really is.

Every, all three of us have come up through the bigger pockets, college, whatever you want to call it, and there's some really successful real estate investors on there that have, I don't want to call them gurus at all. There are the gurus out there there, the fortune builders and people like that that make wholesaling and house flipping and all this science so easy.

You know, when the reality is it is hard and it takes money. As Clint I often say is real estate takes either time, experience or money. And hopefully the people who really do it well have all three.

If you don't have time, you better have money or you better have experience. If you don't have experience or money, you better have time to give to somebody who's got the experience and the money.

You're young and you're able to absorb those body blows that you've taken and recover and get back off the mat. For somebody who is maybe later on in life, that's probably not a risk that they can take and absorb.

If someone were to come to you and say, hey Spencer, I want to do a long distance flip, what would be your advice to them?

Only do so if you can afford and justify to fly out there somewhat regularly and have someone that you trust that's knowledgeable.

That's the key is like someone that can go to a property and see that and know what Schluter is and know what to look for and analyze plumbing and electrical.

The minutiae, someone who's actually flipped houses before, if you have a teammate there, that it's no different whether it's down the street or 5,000 miles away, and someone has to go to the property, whether it's you or a trusted source. So I think that's the biggest answer.

All right, so your YouTube channel, when you started off was you just documented all kinds of things you did. You started off, you were in the computer industry, you were trying to become a software engineer.

You did a whole YouTube thing about your coding bootcamp that you went through. And. And you start talking about just money and fitness and sort of all over the map.

Started talking about real estate and personal finance and all that. When did you discover that you needed to really niche down, and when did you discover the niche that you have now sort of fallen into?

And the video bombed. And I was really bummed because at that point I had not found any success on YouTube. And I thought this was my one chance.

I thought it was an interesting video, interesting title, interesting story, and it bombed. And I was really distraught because I was like, maybe YouTube isn't for me. Maybe I don't have what it takes.

And something happened like three months later where all of a sudden it got picked up, the video just started taking off. And it had something like 70,000 views in a month.

And it ultimately got over 100,000 views, which at the time, for someone getting 500 views a video, a hundred thousand views is like insane. To me, that was like viral almost, even though that's not the case.

But anyway, at that time, I realized, like, oh, it isn't about me being capable or not capable. Like, we're all capable of doing it. We just need to find the right topics. And at that.

Around that time, I had found this other creator, Coffeezilla, who was making videos about Fake Guru Fridays.

And I thought it was interesting that I thought maybe going down a path of seeing some of these Internet marketers at the time, they were running huge ad budgets for teaching you how to start a million dollar business or how to make all this money. And it just did not feel legitimate.

And so I thought it'd be really interesting to do deep dives, complete, objective look at some of these popular gurus. There was no intentions of exposed Content or making them look bad or anything. It was just out of pure curiosity.

I'll make the video because I want to research myself. And then right away I knew, like, oh, this is a pretty clear difference in views. It kind of took off right away.

Well, as Clint and I often talk on this podcast, we often talk about the difference between passive income and residual income. But there's an entire marketing industry that has grown up around the term passive income. Like, you hear it all the time.

Passive income, Passive income, you know, oh, let me teach you how. I make $10,000 a month doing Amazon drop shipping or affiliate marketing on Pinterest, or you name it.

You probably have done a video on every one of those strategies. The reality is a lot different, correct?

Absolutely. 100%. Yeah. Passive income is the sexiest sales pitch. So the three biggest niches on to make money are health, wealth, and dating. Or romance or love.

Because it's. We're all vulnerable. Like, if they're single, who doesn't want to meet the dream woman in the next 30 days?

Or who doesn't want to start making more money if you're struggling to pay your bills and some guy tells you that in the next 30 days, you can add $1,000 a month in passive income. It's so easy to sell. That's why it's so dangerous. Because even though we all like to say we got a tough exterior, man, I would never fall for that.

Then you analyze all of our lives and you're like, oh, we all fall for everything.

What would you say is the most common subjects are? Health, wealth, and dating.

And I don't want you to name names, but what's the most egregious you've seen where it was just like, oh, my God, like, seriously, this guy.

Like, I think the worst is sports betting. Because some of these, like, let's say Amazon E Commerce, like, really low success rate, but real estate agents have a low success rate.

So should that be the determining factor of someone's succeeding? Or is it a scam or not a scam? And some of these guys actually have a little bit of success. Maybe they overhyped their product.

There's at least enough success there where a good student can take the course and run with it. But sports betting, on the other hand, these guys are all losers.

And the way they try to legitimize themselves is through their gold chains, their cash on their dinner table, and their fancy cars. The problem is sports betting has a 0% success rate.

I'm not an expert here, but Some people would argue gambling addiction is one of the worst kinds of addiction, arguably the worst addiction. And so you're influencing young men to think that they're just a few picks away from starting to make a lot of money.

And if you keep buying my picks, then you can start winning a lot of money.

And that might lead someone to not only to losing money, but entering into a funnel of gambling addiction, which that's why I think that industry is the worst.

Out of curiosity, so you've got 492,000 YouTube subscribers right now.

When you figured out that like, okay, this is my niche, this is where I'm headed, There seems to be a lot of interest and I can honestly, you're saving a lot of people a lot of time, probably money and life energy, debunking some of these myths before they get sucked into it. Where were you in terms of your follower count when you kind of went into that area and then like, how did that growth?

I'm just really curious about that. Was it explosive or was it slow over time? How did that happen?

This will turn into a three hour chat if you want to deep dive into YouTube, but I love it. So when I first started this niche, you could argue with the niche. Let's just call it like critical commentary or exposed content.

200 to 500.

Yeah, yeah. And so right away when I was getting a couple thousand views a video, I was like, okay, this is pretty clear. I'd never had this type of growth.

And so there was some momentum and some of the people in our group mache and a couple others were like, dude, you got to go all in on YouTube, you got to quit your job. And I'm thinking like, what? Quit your job for YouTube? What are you talking about? But they were like, dude, you've got to do it, man.

You got to go all in. In a weird way. Fortunately, unfortunately from the circumstances, but fortunately for me, I was thrust into a position of being a full time YouTuber.

Wow. And it's passive income. Correct. Like you put making YouTube videos, it's just, you know, it's what Clint and I do.

We just get in front of a camera, we just turn it on. People just look at Clint's eyes and they're just like, take my money.

I get it.

If any of you remember, like being in college and writing essays, I'm writing one a week and these are essays. This isn't just like me writing down ideas. This is, I'm thinking about the video when writing the script.

I'm creating a hook, the intro, I'm making sure the pacing is strong. I'm making sure that I'm bringing up supporting points when I'm adding critical commentary about someone.

When I'm writing a 17 page script, this takes like two full days. That's after four or five, six days of planning. I read 20 different lawsuits for this video and I intertwined all of the stories.

Now this one's a little more effort intensive, but the point is that this is going to be like a two week process for one video. And I'm experienced now. So when you say yeah, passive income, it's like it's entirely active.

And yes, I have digital real estate with old videos still racking up views, but that isn't entirely true because I have to stay active to receive the passive income. If I stop actively making videos, videos will still get views, but it will be 90% drop overnight.

Yeah. The way the YouTube algorithm works is unless you are continuing to feed that beast, even your old videos are not going to rank as high. Correct.

For the most part. Some niches are outliers, but yeah, for the most part, people would experience a massive, massive, massive reduction in views on old content.

Spencer, I love what you just said there. It's resonating with me across so many different people that have, quote unquote, passive income, different businesses.

And that's one of the points that we point out is a lot of times what people call passive income is residual. They front loaded the work years before. But what you just said was I have to keep staying active to keep getting that passive income.

That's gold right there. Because the reality is, in one way or another, you're still trading time for money.

So if you have to keep being active to keep getting that passive income, even if it is residual from evergreen content that you created. That's not what we would call truly passive income. So I love your ability to debunk a lot of myths out there because it's what you do for a living.

You're very good at it and kind of seeing at the end of the day even what you're doing. A lot of people out there have the opinion that YouTube content is evergreen and it's going to keep working.

But if you're really talking about a 90% drop off, then all of a sudden that passive income starts to go away. And Neil likes to use the analogy of shoveling coal into a steam engine.

You can stop and it's going to keep running for a while, but eventually it's going to slow down and it's going to stop. I love that phrase.

I'm going to use that in the future of like, if you have to keep staying active to keep getting your passive income, is it really passive income? That's a really good point.

Yeah. And with the way content moves, it moves so fast every year the platform elevates. I've noticed that.

I'm spend all day analyzing the platform, so I would consider myself pretty much an expert on the YouTube. And with every passing year, your old content in some ways gets worse. In some ways, Right.

Because if your production wasn't as good, your audio wasn't as good, or the editing and pacing wasn't as good. If someone's watching Mr.

I think he's the most successful YouTuber right now by a long way. I've heard him say that. I can't remember what the exact number is, but he spent like $100,000 on thumbnails. And I've heard this a lot.

Where a lot of YouTubers now are just starting with the thumbnail.

Yeah, thumbnail and title comes first.

They start with the thumbnail and the title before they've written a word of the script.

Correct.

And then they'll write the script and build the video that goes along with that thumbnail and that title. And then now YouTube is allowing you to a B thumbnails as well, to see what drags people in.

And I see it myself all the time, where I'm like scrolling through YouTube and I'm like, oh, I'll click on that. And I go, why did I click on that? Oh, it's because I had a really good thumbnail.

It's everything. Title and thumbnail are everything. The packaging of the video. It's really title, thumbnail, and topic. Everyone's subjective.

They're different experience. But there's probably some topics that if someone brought up, you're gonna watch no matter the title or thumbnail.

Like, for instance, after Aaron Rodgers got hurt, if you're really into sports and your favorite guy's talking about it, the thumbnail and title don't really matter. It's the idea. He's talking about Aaron Rodgers. But for a lot of creators, all three of those are way more important than the video.

Because if you don't click, the way I word it is Christopher Nolan could make a video and put it on YouTube. A hundred million Dollar Movie.

But if it's a terrible title and thumbnail and no one click on it, it's going to get suppressed and the algorithm might get a thousand views. It's like an insane thought. That's just how it works.

It's funny you mentioned that. I watched so recently, Oliver Anthony kind of became a YouTube sensation with the song Rich Men north of Richmond.

And when I first somebody, I saw it on social media and it had like 3 million views or something like that. And I pulled it up the next day, speaking with a friend about it, because he had seen it. We pulled it up and there was like 7 million.

And then the next day it was like 13. Eventually went on to have just an unbelievable amount of views.

But like two or three days in, a group of people went to pull it up on YouTube and I was there in the room, and there were probably 20 different thumbnails of him standing up singing that song. But it was all different youtubers giving their commentary on it and talking about it, but using that thumbnail.

And you could see that each of them were getting hundreds of thousands of views because people were trying to find the right one and they all looked like the right one.

And it was really funny to me watching those people grab onto that moment in time of pop culture and writing the coattails of that moment to get views. And it was working for, like, pages of them.

And I realized it just impressed upon me of, like, so many people out there, they're fighting for those reviews. They're clawing for it. And so any moment for those people is an opportunity. And frankly, just thinking about it, I got exhausted.

Like, within a day of his original clip coming out, there was 20 or 30 of those people. I knew that they had all been working through the night on that.

YouTube is exhausting, especially if you're a creator that relies on urgent news and you're reacting to it.

Like, you got to make videos that people want to consume, which is great for the consumer, but as the creator, it's exhausting.

Yeah. Well, the title of our podcast is Income. So let's get into some of the economics of modern YouTube right now. And I know you're very.

My favorite conversation.

Yeah, I know you're very transparent about what you're making, what you're not making. What was the growth of your income from just YouTube.

And we'll get into sort of the third party, you know, advertising and things like that, but just from AdSense. AdSense, correct.

When I lost my job, I was like, $800 on my first month. I think I made $800 from AdSense. These are the ads that get played on your videos. And that summer advertising was actually incredible.

Do you think's driving that drop?

Ad dollars are down pretty big. So during COVID we saw a huge surge in spending.

And I think a lot of it was actually people selling like courses and gurus because in the financial sector the ad rates are notably significantly higher.

I was releasing 12 videos a month and so my views were somewhere between 2 and 4 million views a month. And now I'm just down to one video a week at best. And so my views are falling in line with that.

A 75% reduction or 66% reduction in video uploads is probably 67, 70% drop in views. And then ad dollars being down 30% is like a combo effect. I'm about 4,000amonth right now from AdSense.

Gotcha. You're able to do third party advertising on your channel if you want, correct?

Question.

So we talked about it. It's obviously wildly active and you systematized it and you've gotten really good at it. But two part question. Number one, do you enjoy it?

Are you having fun or are you happy with what you're doing? And number two, like, does it give you location and time independence or is it all encompassing with your time and you have to be in one location?

I love that question because in some capacity I do like it. I like it because of what it provides to me. I've had opportunities, experiences. Like I was in a private room with Floyd Mayweather.

That's an experience that was crazy. I went to an event and airac like recognized me and thought it was cool to meet me. He's one of the biggest YouTubers.

If you aren't familiar with him, like 15 million subscribers and I get recognized in public. So like this kind of stuff is like really cool to me. However, the downside is that this type of content is negative when you're critical commentary.

And like all my stories are negative. It's talking about people losing money or there's a scam or there's some type of exposed content to it.

And occasionally you deal with the pushback to that. And unfortunately I have been current party in a lawsuit, so that's like a major negative which I think has clouded my mind.

And so if you really ask me, do I enjoy it? No.

Because if I had the ability to do a different career or different type of content, I started a second channel for, for what it's worth, that's real estate content. And so like once my lawsuit's over, I'm probably going to shift into that full time. And so like, do I enjoy it?

Yes, it makes money, it pays my bills and it brings me opportunities. So from that perspective, yes. But like the day to day, I mean, I work seven days a week.

I mean, I've taken a few days off but like for the most part I've been mentally tied into my channel for two and a half years every day. There's no escape. Like I work till midnight probably on many nights a week, Sunday nights. So no, I'm answering the independent question also.

Like, no, not really. I mean, occasionally I get to travel for content, which is really fun and I do a lot more of it if I wasn't so burdened by legal fees.

That part is really fun. Like getting to go to a different city and make content essentially pays for travel is like the coolest thing in the world to me.

Unfortunately, I haven't been able to do more of that. So I'm very location dependent at the moment, which is what you see behind me, my studio. I have to film here in my house.

Well, I think the whole modern online economy. I heard a video today from Gary Vee that really hit me hard where he talked about attention. Attention is the gold.

Nowadays that is the most valuable thing that most individuals, companies like. If you have attention, you can do almost anything. You can sell anything, you can be an activist for things.

It is so powerful and it's seductive because I see it on Twitter. Like one of my favorite Twitter personalities is a guy named Sweaty startup Nick Huber, Self storage guy, sharp as a whip.

But it's so funny watching him play the game because I see it now and I know you see it where it's like I see him basically dropping the turd in the punch bowl to drive engagement. Because if you can get people hating. And that's part of what I struggle with.

Like, I posted some video about being a real estate investor and haters come out of the woodwork nowadays for real estate investors.

And I had to go, wait a second, that was my most viewed video because I was sitting there arguing back and forth with some person who was clueless about how real estate investing works. And I will never meet this person. They're not going to show up at my door. Knock, knock, knock. You suck, landlord.

And you're not going to change their opinion from a comment section either.

And I'm not going to change their opinion on a comment section.

But it's this twisted thing that I kind of love, but I think we all hate and like, like it's this algorithmic monster that is driving so much of the world right now.

Yeah, if I was a blogger, I could probably write a really good, like 5,000 word essay on this concept. As you were speaking, I thought of this, call it like the dark mental health line or, you know, some type of like, sexy word.

But essentially what I'm envisioning is there's a line.

If you're underneath the line, whereas you're reliant on attention to pay your bills, it is the most unhealthy relationship in the history of the world. And that's where I'm at right now.

If you rely on people's attention to pay your bills, like, think of how much struggle you'll have where all you care about is people watching you. That could be three hour talk about how unhealthy that is. So imagine that. Well, that's where the line is.

If you're underneath the line, it's incredibly unhealthy.

But on the flip side of that, if you have all your money from a business or you're outside of attention, where you can leverage attention to further boost your profile or your business or whatever, it then becomes a game that you could almost, you could win, essentially, and you have a much healthier relationship. For instance, the Nick Cuba, I'm aware of his Twitter, I think I follow him even.

But once you're aware of that and you know you can't be canceled or your bills are paid, your family's covered from some business outside of Twitter, you aren't reliant on people's perception and you can just throw a little turd in the fishbowl and step away and let them all fight.

When your bills being paid are reliant on them, their perception of you, or their interest in your next post, then you start getting in there and you start worrying like, oh, did this person say something mean about me? Or they say, man, Neil, I used to love you, but you went so political. I used to love you, but. And it eats at you.

You're like, oh my gosh, am I effing up now? Am I screwing up? Am I doing the wrong type of content? And it eats at you. Rant over.

We're running out of time.

I think this is a nice little segue into sort of tie this all back to truly passive income, which is how important it is for all of us to have multiple streams of income, to not be reliant on that one W2 job, on that one rental property, or that one business, or relying on the attention economy to pay your bills.

So Spencer, when you again have some disposable income that's not going to lawyers, what kinds of things do you envision trying to put that money into? Let's say you had $100,000 in the next 30 days you had to invest. What do you think you would put it in?

I love this question because I think about it all the time. Because I'm in a crossroads. I have a decision. Either go in real estate or go all in on content.

I haven't figured it out exactly, but let's play the game. I'll answer the question. I think all in on content is actually the best play.

And so I actually would go all in on my second channel. A hundred grand. I would hire a team. I would hire a videographer.

I would be able to produce one video a week, have an editor, probably two videos a month, one every other week. High, high, high quality. I think that would be the best path.

And then when I start making 100 grand a month, that's when I go into buying real estate.

I love it.

It reminds me of the book Richest man in Babylon of know what you're good at, know what you know, know what you don't know, and lean into your skills. So that makes sense for you. That wouldn't make any sense for me at all.

But if you know thyself, know your skill set, know what you've done in the past, know what you're capable of, it makes perfect sense. Let me just say I really appreciate your candor today.

You're being an open book about some things that are probably not easier to talk about and about monetization and about happiness and work, life balance and things like that. So thanks for that. I really appreciate your willingness to share that always.

Yeah, thanks for having me.

Thank you so much for listening and watching the Truly Passive Income podcast.

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And remember, with Truly Passive Income comes freedom of time, place, and the freedom to pursue your higher purpose. Sam.