Investing in BYU single and married student housing

[Mark Hopper]

I am very new to real estate investing and am looking to purchase my first property in a few months. I have three children currently attending or will be attending BYU and I like the idea of investing directly into this niche. I am looking for any advice, particularly the cons and/or gotchas with the nuances in BYU approved housing. With one child being married, i am very interested in using an FHA loan on a multi-family unit that is targeting the married segment with my son being "owner occupied". I am curious how far out can the property be from campus and still attract that market? Any advice would be appreciated.

[Jeremiah Maughan]

The first house I owned was a townhouse my dad bought and put me on the loan via FHA and also on title. I later bought him out through a cashout refinance and then it became my first rental. My dad ended up paying very little for me and my brothers since roommates were able to pay the mortgage. The nice thing is that you can get around the singles limit when one of the kids is a co-owner due to Provo's head of household definition. I was legally able to have five in a unit otherwise zoned for three. That kept the purchase price low and the income high.

The "gotchas" are zoning and assigned gender if you're going for BYU Contracted (formerly known as BYU approved).  Many student rental buyers make the mistake of thinking they can put six in a unit zoned for three or they buy a unit for their kids, forgetting that if it is BYU contracted that only the male kids or the female kids (depending on assignment) can live there.  You can buy something that's not BYU contracted like we did, and your kids can easily get housing waivers, but their friends who are also attending BYU might not be able to get waivers to live with them.

To attract married students to a multifamily, pretty much anything within 10 or 20 blocks that is priced affordably will attract married students.  You'll have higher demand within five or eight blocks, but the difference isn't all that significant. 

Also know that BYU contracted housing does not typically allow married couples.  Sometimes they do but they've been cracking down on it.  So if you want a married kid to live there with single kids, you may not want a BYU contracted place.  The family exemption might be possible, but we'd need to check with BYU OCH for that.

Let me know if you have more questions. Definitely a subject I'm familiar with.