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.

Sorry about the duplicate post. My phone app crashed and it did not look like TFE original one posted.

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.

@Jeremiah Maughan

Thanks for that detailed response, I learned a lot.  Do you do a lot in the provo area?  Do you have a strong sense for the available inventory for multifamily?

Multi Families are really hard to come by in Provo (and most of Utah County).  They sell at a premium, and are hard to cash flow as rentals from the numbers I have ran.  I own 2 condos that are BYU approved and I keep my head above water with those. I'd love to house hack but the market is really picked through close to BYU as everyone wants to do the same.  I think they are there, they just get bought up quickly and don't expect any bargins!  I have found condos to do OK, just not as well as in other areas.  I am looking to add a few more as I don't see the market ever going away or down. 

We bought a distressed duplex two years ago and fixed it up in Provo. It's very near the Provo cemetery about a mile due south of campus and we haven't had too much trouble getting it rented out. I've found that if you want married students the timing is everything. You have to get it listed at semester breaks, otherwise you don't get the students really interested. I mostly agree with Joel about getting them to cashflow, but the rental market is really booming in Provo, just have to buy at the right price to get the multi-families to work. Ours cashflows really well, but again, we bought it in 2014 and put a ton of work into it. Prices have only gone up in that time. Jeremiah nailed the nuances with BYU housing stuff, so I won't repeat that. I've really liked the Provo market

I own two duplexes outside of the BYU approved housing zone.  I have grad students in one unit (they don't need an exception) and I was planning to rent another unit out to undergrad students after having them get an exception (which the students have said would be pretty easy).  The other two units (one in each duplex) are rented to families.  So I've got a pretty good mix of tenants.  My duplexes are 1.3 miles West of campus.  PM me for more information - I'm happy to give more advice as well as possibly selling.  

Greetings! Newbie potential investor here (and first post on BP!). I have a daughter probably going to BYU in 2019, and 4 more daughters that may follow suit in the coming years. I've long thought about investing in a place that they can each stay (and hopefully cover or reduce their own rent payments). Has the market changed much since the original post ( I assume it has only gone up :/ ). What are some good resources to look for BYU contract housing specifically? Thanks in advance for any advice. - Graham

We're in the middle of this process ourselves. Our daughter attends BYU and her husband is in the process of getting citizenship. In regards to FHA and multi-family, You can no longer do a non-occupant co-borrower FHA multi-family loan with only 3.5% down. I know until very recently you could but they now require 20 or 25% down for non occupant co-borrower for multifamily. Our daughter's husband's income would not count towards the loan, so they could not qualify on their own. So we had to go the non-occupant co-borrower route, with my husband and daughter on the loan and my daughter on the title. Anyway our way around that was to purchase a home with an accessory apartment that did not have separate utilities (hence it is not considered multi-family). We also decided not to do the FHA loan so that they wont have mortgage insurance for ever. but were still able to do a low down payment, maybe 3 or 5% I can't remember. I did have my daughter get her realtors license in UT, this summer, before we started the process. One nice thing about FHA is that as a realtor you can put your commission toward your down payment, so the initial costs would have been low. Instead they were actually able to find a great deal on KSL, FSBO so she didn't end up getting any commission, Anyway. I'd love to help if you have any questions about what we learned or what we are still learning. etc.

Thanks for this. Best of luck to your Son-in-Law! 

Still researching the area and weighing options. My daughter is very interested in investing (at 17 she already has more money in a mutual fund than I did 5 years after I got married :) ). Maybe would be interested in going in on the property herself. Are they planning to live there just until they graduate, and do you plan to hold if/when they move? Also, does the home need any repairs/updates, or is it fairly turnkey?