How this Millennial invested in luxury housing for students and built a $130M real estate portfolio

‘I had just created almost $3.5 to $4 million in value as a 19-year-old’

When he was just 19 years old, Brian Moshayedi bought his first property and turned the apartment into luxury housing -- specifically for college students.

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At the time, Moshayedi was a sophomore at the University of California, Santa Barbara and was disappointed by the lack of nice housing for students in the area.

“I started asking around like, where is the nice housing, why isn’t there nice housing?” Moshayedi told FOX Business. “Everyone would say … this is a party school and none of the landlords want to invest in the students for their housing.”

“It was a big bummer,” he added.

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Today, 30-year-old Moshayedi has $130 million in investment property. His company, Isla Vista Luxury Living, lists 12 properties on its website and promises amenities including on-site laundry, stone tiled floors and stainless steel appliances.

He said his apartments also include WiFi, DirecTV and flatscreen televisions.

Brian Moshayedi started investing in real estate when he was 19. (Brian Moshayedi)

The interior of one of Moshayedi's units is pictured. (IslaVistaLuxuryLiving.com)

Moshayedi was inspired to buy his first property in 2009 when he was living in a frat house -- though he wasn’t in the fraternity himself.

“I learned that they were throwing all these big parties and not paying rent on time and one of the units got condemned by the city for having mold in it and all this crazy stuff,” Moshayedi said. “So I was like, alright, this is the perfect opportunity for me to try and buy this place, reposition it and take the rents from say, $13,500 a month to $28,000 a month.”

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“My assumption was that 5 percent of the market’s willing to pay a premium for nice housing,” he added.

Moshayedi ran his business model by relatives and family friends and raised enough money to buy the property in 2009. When the students moved out the following summer, Moshayedi had the building renovated in just three months.

“I bought it for $1.6 million and then I put about $450,000 into it for renovations and then I went to the bank a year-and-a-half later and they appraised it at $5.875 million, so I had just created almost $3.5 to $4 million in value as a 19-year-old,” he said.

The exterior of one of Moshayedi's properties is pictured. (IslaVistaLuxuryLiving.com)

The kitchen of one of Moshayedi's properties is pictured. (IslaVistaLuxuryLiving.com)

From there, Moshayedi continued to renovate more buildings for luxury student housing in the area. Today, he has about 130 units.

His investments also made a broader impact on the student housing market, he said.

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“I definitely started a trend within all the management companies,” he said. “All the management companies started telling all of the owners of the properties … what I was doing, where I was raising the rents by $5-$800 a unit, sometimes $1,000 a unit just by renovating the apartments and putting $30,000 a unit into it.”

“It was really nice,” he added. “I started seeing all these buildings be remodeled in the area, the rent started driving up in the area. I really had a big impact and set a bar for all these luxurious student housing units in Isla Vista, where people really had never seen.”

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Even though student housing is typically known for being cheaper and not quite as nice, Moshayedi said that upscale apartments are actually a way to help students be more successful.

“By offering kids a nice, clean, safe environment to live in, you are now elevating their ability to be more social, be more successful,” he said.

One of Moshayedi's 12 properties is pictured. (IslaVistaLuxuryLiving.com)

A property owned by Moshayedi is pictured. (IslaVistaLuxuryLiving.com)

“It’s just my belief that if you provide someone a nice space to work in or live in or be in, they’re going to produce a lot more and be a lot happier and more successful,” Moshayedi added. “You could see it as investing in yourself and investing in your environment. That’s kind of how I saw it.”

Even with all the nice amenities, Moshayedi said he’s not concerned that students will be less careful with their apartments.

“One thing that I’ve seen, in the apartments that are nicer and more renovated and that have higher rents, you get a pool of students and renters that respect the unit more,” he said. “They pay right on time, they respect the unit, it’s always clean and all that good stuff.”

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Meanwhile, some parents are actually buying apartments and condos for their college students, according to an October report from Business Insider. According to the website, some realtors are calling them “kiddie condos.”

The website reported that some parents are finding it cheaper to just buy a property for their children instead of paying for room and board to universities. The strategy also has other benefits including improving the student’s credit score.

However, in November, Waypoint Real Estate Investments CEO Scott Lawlor told FOX Business’ Maria Bartiromo on “Mornings with Maria” that the trend may not be as prevalent “as some of the headlines might suggest.”

“We’ve been very active in the student housing business the last few years and I’ve heard a bit about what you’re describing, where, you know, rather than rent an apartment for your son or daughter, you buy them a condo unit,” Lawlor said.

“It’s not really driving the market, per se,” he added. “The student housing business has experienced a little patchiness the last couple years as well. There’s been a lot of new supply there, too. Capital has just been looking for something to do in the rental housing space, frankly.”