Did an NFL player become a profitable house rehab flipper?

Today’s WSJ says NFL player Kyle Van Noy is a skilled real estate rehab flipper. I was going to check if that was true, but the article fails to give enough information. The key fact that is missing is how much did comparable houses that were not rehabbed go up in value during the same period. Probably about the same.

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Hardly any rehab is profitable. Van Noy appears to have spent $320K n renovations to three houses. That is less than the difference between the purchase and sale prices in each case. But A. we do not know the buying or selling transaction costs which are substantial and B. although the Journal implies that the price increases were due to the rehab, they do not prove it.

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In my experience and observation, the only profitable rehab is where you change unrentable space into rentable or usable space like changing hallways and store rooms and the cavities above and below stairways into usable space.

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In two of the three homes, Van Noy actually did that but in both cases, he finished two basements. I generally cringe at finishing basements or converting attached garages to family rooms and such, but it can on rare occasions be done cost-effectively and such that the final result is attractive and increases home value.

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Van Noy’s houses look like they were tip-top interior decorator mansions when he bought and when he sold and that his basic theory of rehab was that the prior interior decorator was awful and HIS decorator—his wife—was wonderful and the difference raised the value of the house more than the cost of the rehab.

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More likely the person to whom Van Noy sold did not like the interior either and brought in their own third decorator and changed it yet again with none of the decorators producing a resale profit from the rehab per se.

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Generally, the rehabber raises the property value LESS than the cost of the rehab if at all. But he or she attributes the increase in sale price over purchase price to the rehab. In fact, the increase in the sale price over the buy price was likely entirely due to marketwide appreciation. If we were talking about normal homes, we could look at Zillow to see what the sans rehab marketwide appreciation was in the neighborhood in question. But mansions have too few comparables to measure that reliably.

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