This is Part 2 of a series by our team on the Provo Housing Racket. View Part 1 here
In Part 1, we concluded that one of the biggest drivers behind BYU's broken student housing market is BYU itself. In Part 2, we will examine Redstone Residential and MHE Real Estate as a case study on the greater Provo student housing market.
Most students have no idea who their actual landlord is, and unmasking owners can be a lot like taking apart a Russian Nesting Doll—one shell company after another. Consider the Liberty franchise. According to Utah business records, the Liberty on Freedom complex is owned by Liberty on Freedom (LLC). In turn, Liberty on Freedom (LLC) is owned by Liberty Square West Investors (LLC) and Liberty Square West (LLC). Finally, Liberty Square West (LLC) is managed by (name redacted to avoid doxxing)
, CEO of MHE Real Estate. A quick look through the MHE Real Estate website
reveals that MHE is a major player in the Provo housing market, despite the fact that the average renter has never even heard of them.
MHE at least partially owns: Campus Provo, Liberty Square, Liberty on Eighth, and Liberty on Freedom. These are among the largest BYU complexes by bed count. Liberty Square is actually the single largest BYU complex by bed count.
While MHE owns the apartments, Redstone Residential (a real estate operating company) manages everything from leasing to maintenance and rent collections. In other words: Redstone is essentially a middleman between landlords and renters. Most operating companies take a percentage of revenues, driving up rent and disincentivizing any expensive maintenance or improvements.
Residents we spoke to at Liberty on Freedom noted aged buildings, shared bedrooms, cramped kitchens, and a single shared bathroom. With utilities, rent comes out to about $400/month.
Before MHE and Redstone, Liberty Square had a vacancy rate of 30-40%
during the summer months due to the nature of fall/winter and spring/summer length contracts. Now, Redstone-managed properties almost exclusively offer 12-month contracts, and vacancy has fallen to nearly zero. The burden has shifted from landlords to renters, and students are left scrambling to find replacement tenants for the summer months even though most BYU students leave Provo in April.
Redstone manages about half of all beds at the large BYU complexes and an even greater share of the overall market. Because BYU has kept the barrier to entry for new landlords so high, many students are forced to choose between one Redstone-managed property or another. And if it's not Redstone, it's likely Aspen Ridge. Small landlords are struggling to compete or even get BYU approval.
When COVID hit, the MHE-owned and Redstone-operated Liberty franchise was generally uncooperative with students trying to be released from their contracts or get rent reductions. Meanwhile, Redstone Residential received between $2-5m
in forgivable PPP loans.
When a few large firms monopolize a market, competition falls and consumers are made worse-off. Granting students access to the open market is the best way to promote competition and loosen the hold of companies like Redstone and MHE.
It's time for BYU to step-up and fix the broken housing market they helped create.