I never had the privilege of meeting Kurt Cobain, but for about a year, I slept in the same room where he lay his head as a baby.
This odd fact hasn't made me millions of dollars, turned me into a rock star or secured me a spot on Oprah's couch, but I have learned some neat things through it that I want to share with you today. Hence, this is the story of how I accidentally bought Kurt Cobain's first house -- and the entrepreneurial lessons it taught me.
Real estate is powerful stuff, and by the time I was 21, I knew that my entrepreneurial journey would be centered around the purchase of rental properties.
However, when you are a punk 21-year-old kid (and broke), it’s not easy to simply buy a house. Instead, I relied on a strategy that today I call “house hacking.”
The concept of house hacking is simple: Find a small multifamily property (either a duplex, triplex or fourplex), live in one unit, and rent the other units out. The beauty of house hacking is that:
- You can get in for a very small down payment because it’s an “owner-occupied” house. Banks look at small multifamily properties in the same way they do single-family homes.
- You get “on the job” training in becoming a landlord, learning how to rent a house out and handling tenants.
- If you buy right, you can live for free -- and maybe even make some money in the process.
- When you move out, you can keep the loan in place until it is paid off. In other words, you start building wealth.
Being that this is an Entrepreneur post, I won’t bore you with the other incredible benefits of House Hacking. For that, check out "How to Hack Your Housing and Get Paid to Live For Free."
This is what led me to the ugly duplex that became my first rental property. The duplex was cheap and in relatively good condition, located in the small fishing/logging town of Hoquiam, Wash., just a stone’s throw to the larger city of Aberdeen. I was attracted to the property not only because of the price ($77,000), but also because unlike most duplexes, this property consisted of two completely separate homes, jammed neatly on one lot (with a small yard in between).
And even more important, I could live for (almost) free.
I applied for the loan, was approved, and purchased my first rental. After a few weeks of “sweat equity,” my wife and I moved into the small, one-bedroom home in the back, and I rented the front house out to some great tenants.
That’s when the photographs started.
Flashes of fight and Swedish tourists
“Brandon, I keep seeing flashes of light in our window.”
That phone call from the tenants in the front house was the first sign I had that something was interesting about this house. We assumed (correctly) that someone was taking photos of the house.
"Probably just the county doing routine appraisals,” I assured the tenant.
Several years went by, and several tenants moved in and out of the property, but every few months we would get a similar phone call about photographs being taken. Maybe the county was just really ambitious with that street?
I didn't think much of it until the day four Swedish tourists knocked on the door of my tenant's house and wanted a tour of “Kurt's House."
I jumped online and began to research. Sure enough, I discovered that I had accidentally purchased Kurt Cobain’s first house. Not only that, but I also inadvertently bought his second as well, because baby Cobain and his family moved from the back house into the front house a few weeks after Cobain was born. The family lived there until Cobain was two, when he moved to Aberdeen.
Sure, everyone in this town had some sort of connection to the music legend. Some played on the same baseball team. Others hung out at the same parties. Heck, my father-in-law sold all his guitar equipment to Cobain’s one-time roommate.
And I bought his first two homes.
Last night I watched the newest Cobain documentary, Montage of Heck, on HBO and they showed a picture of Cobain’s birth certificate. Sure enough, there’s my old address, listed right on the screen.
The rock and roll history is not the best part
Although I’ve moved several times since living in that tiny, one-bedroom house in Hoquiam, I still own that rental property today. The Cobain connection is fun to tell at parties or when blogging on Entrepreneur, but the real value in that property is not in the history -- it’s in the math.
You see, every month I receive two rent checks from tenants who live at the property. The front house rents for $650 per month, and the back house rents for $535, bringing in $1,185. Our expenses are very low on that property, so even with the $620 mortgage/taxes/insurance payment, I make money every month.
I tell this story not (just) to brag, but to illustrate a couple key points:
1. When you are just beginning your entrepreneurial journey as I was, sacrifice is important. My wife and I lived in that 400 square-foot house because we were able to live almost for free. This enabled me to build my real estate portfolio and flip houses because I didn’t need to pay much to live. What are you willing to sacrifice to make your entrepreneurial dreams come true?
2. Real estate is powerful stuff. I know this is Entrepreneur.com, and most of the readers are building sexy tech-related companies. But don’t forget about the slow, boring, incredibly powerful strategy of rental properties for building your wealth. There’s no reason you can’t do both.
What kind of sacrifices have you made in your life to accomplish your entrepreneurial goals? Please share them in the comments section below, and don't forget to share this post on your favorite social media channel.