The one number that decides whether a first flip works isn’t the purchase price or the after-repair value. It’s the rehab budget — specifically, how far the real rehab lands from the number the investor wrote down before they offered. I run the sales side at Diamond and work with flippers every week, many on their first Texas deal. The ones that go sideways almost never bought the house wrong. They scoped the rehab in their head, bid it loosely, and found out in week six what the walls had been hiding.
This is the rehab budget line by line, the way I’d walk a first-time investor through it before they offer: the walk-through and scope of work, the twelve line items with DFW cost ranges as of 2026, finish level, the 15% contingency, hard-money draws, DFW permits, contractor vetting, the timeline, and a full sample scope on a hypothetical 3/2. It’s stage four of the new investor path — find a deal, run the numbers, fund it, budget the rehab, close. If you haven’t read the offer math yet, how to run the numbers on your first Texas flip covers where this figure plugs in. Every example here is hypothetical: round numbers to show the shape of a budget, not a specific Diamond deal and not a promise of what yours will cost.
Why the rehab number is the one that kills first flips
The buy-side math is ARV × 75–80% − repairs. The ARV comes from closed comps and the percentage is a market convention. The repairs are the input you produce, and every dollar you underestimate comes straight out of the margin.
And an overrun rarely costs only the overrun. It costs time, and time on a hard-money loan is the expensive part. A $9,000 surprise in the sewer line is $9,000; the three weeks to discover it, bid it, permit it, and re-sequence the trades around the trench is another month of interest, taxes, and insurance on top. So the discipline isn’t “estimate the rehab.” It’s produce a written scope, get it bid by a contractor who has walked the house, and add a contingency you don’t let yourself spend.
Walk the house before you offer — and build a scope of work
A scope of work (SOW) is a written list of every task the rehab requires, by trade, with a quantity and a cost on each line. It’s what a contractor bids against, what your lender’s inspector checks draws against, and what keeps you from making $4,000 decisions at the tile store on a Friday afternoon. You build it before you offer.
Walk every house in the same order so you stop missing the same things: exterior and roof (shingle age and hail wear, soffits, gutters, grading, fence); foundation (sticking doors, diagonal cracks over openings, separated brick — anything past hairline cosmetic movement gets a Texas-licensed structural engineer’s evaluation, typically $500–$800); mechanicals (HVAC age and refrigerant, water heater age, panel brand and amperage, any sign of aluminum wiring in a 1965–1973 house); plumbing and drains (run every fixture; on a slab house with original cast iron, camera the main line, $150–$400, during your inspection window); interior, room by room (kitchen and baths first); and the attic (insulation, ducts, decking stains).
Then write it down with quantities: “Kitchen — remove and replace 22 linear feet of cabinets; quartz counters approx. 45 sq ft; tile backsplash approx. 30 sq ft; stainless appliance package; sink, faucet, disposal; four recessed lights.” Not “update kitchen.” A line a contractor can price is a line you can hold them to. Every deal page on the marketplace carries a rehab calculator pre-filled with the scope Diamond estimated for that property; adjust it line by line to your quantities and finish level, and use it as the backbone of the written scope you hand to contractors for bids.
The 12 line items, with DFW cost ranges as of 2026
Planning estimates as of 2026 for a typical 1,500–1,800 square-foot DFW house. Where Diamond has published a full cost guide on a line, it’s linked and the number matches it. Every figure is an estimate until a contractor who has walked the house bids it.
| # | Line item | Typical DFW range (2026) | Common first-flip surprise |
|---|---|---|---|
| 1 | Roof | $10,000–$17,000 full asphalt replacement; $8,500–$25,000+ full range | Rotten decking under the tear-off |
| 2 | Foundation | $500–$3,500 minor · $8,000–$15,000 moderate · $20,000–$40,000 major | Prior “repair” with no transferable warranty |
| 3 | HVAC | $8,000–$15,000 full system · $4,500–$9,000 condenser and coil only | Leaking ducts |
| 4 | Electrical panel / rewire | $2,200–$3,800 like-for-like panel · $2,800–$4,500 100A→200A upgrade · $10,000–$30,000+ rewire | Aluminum branch wiring |
| 5 | Plumbing / sewer line | $1,500–$3,500 water heater and fixtures · $7,000–$28,000 collapsed sewer line · $4,500–$15,000 repipe | Cast iron that fails the camera |
| 6 | Kitchen | $6,000–$12,000 refresh · $15,000–$30,000 full retail replacement | Particleboard cabinets that can’t be refreshed |
| 7 | Bathrooms (each) | $3,000–$6,000 refresh · $8,000–$15,000 full gut | Subfloor rot around the tub |
| 8 | Flooring | $3–$6/sq ft LVP installed · $2–$4/sq ft carpet · $8–$15/sq ft tile | Slab that needs leveling compound |
| 9 | Interior paint | $3,500–$7,000 walls, ceilings, trim | Popcorn ceilings |
| 10 | Windows / doors | $450–$900 per replacement window · $400–$1,500 exterior door · $200–$400 interior door | Rotten frames behind the trim |
| 11 | Exterior / landscaping / fence | $2,000–$10,000 exterior paint · $1,500–$5,000 landscaping · $25–$45/linear ft wood fence | Drainage that was moving the foundation |
| 12 | Permits / dumpster / cleanout | $400–$700 per dumpster pull · $1,500–$4,000 demo and haul-off · $500–$2,000 permits | The second dumpster |
The big-ticket lines are where the deal is won or lost. The numbers are in the table; here is what decides each one, with the full guide linked.
Roof. The DFW roof replacement cost guide explains the year-15 insurance trap — a roof past about 15 years can push your retail buyer’s carrier to actual-cash-value coverage, which is why a flip often replaces an older roof even if it isn’t leaking. Budget 10–20% over a sight-unseen bid for decking.
Foundation. Bid against a Texas-licensed engineer’s report, not a foundation company’s walk-through, and keep the transferable warranty paperwork. The Texas foundation repair cost guide tiers the work, and the foundation cost estimator is a sanity check on a bid.
HVAC. A pre-2010 R-22 system is a replacement, not a repair — the Texas HVAC replacement cost guide covers why, and when a condenser-and-coil swap is enough.
Electrical. Under the 2023 NEC most DFW panel jobs become a full service upgrade, and a 1965–1973 house may carry aluminum branch wiring on top of it. The electrical panel replacement cost guide has the brand identification; a Federal Pacific or Zinsco panel gets flagged on sight by your retail buyer’s inspector, and many carriers now decline to write the house or require replacement as a condition of coverage.
Plumbing and sewer. Camera the main line on any slab house with original cast iron. The sewer line is the line that explodes, with under-slab work at the top of the range in the collapsed sewer line cost guide, and a pressurized supply-line failure has its own repair ladder in the slab leak repair cost guide. Either can take the foundation with it.
Two lines that aren’t on the list but can be. Mold from a long leak — see the DFW mold remediation cost guide — and, in the outer DFW counties, a failed septic system or well, per the Texas septic and well failure cost guide. Those guides are written for sellers; the numbers are the ones you underwrite.
Finish level: rental-grade vs. retail flip, and matching the comps
The same scope can cost $45,000 or $90,000 depending on finish level, and the right level is set by the comps, not by taste. Rental-grade is durable and cleanable — painted or budget cabinets, laminate or entry-level quartz, LVP, a tub surround, mid-grade fixtures — and it’s the answer when the exit is a tenant or the submarket is entry-level; if your plan is a hold, how to analyze a Texas rental property covers why the budget shifts. Retail flip is the finish the best closed sale in the neighborhood had: shaker cabinets, quartz, tiled backsplash, a tiled primary shower, stainless appliances, new lighting. In first-ring DFW suburbs — the 1960s–80s brick ranches in Garland, Mesquite, Irving, Arlington, and older Plano and Carrollton — a clean mid-grade retail finish is usually what the comps support. Renovating past the neighborhood ceiling is money the appraisal won’t return.
Pull the renovated closed sales within about a half mile and the last 90 days, open the photos, and write down what they had. That’s your finish level. The published case studies show real Texas before-and-afters, most of them DFW, with the finish the investor chose.
The contingency: 10–15%, and why 15% is right on a first deal
Experienced operators carry 10% of the rehab line as contingency. On a first flip I tell investors to carry 15%, untouchable until a specific line item genuinely exceeds its bid. A first deal overruns two ways at once: the house surprises everyone (that’s the 10%), and the operator surprises themselves — late scope decisions, change orders from a vague SOW, an untested contractor, a week lost at every handoff. The extra 5% is the cost of learning on a live deal. On the $70,800 scope below, 15% is about $10,600; finish without touching it and it’s margin you kept.
It goes in the repairs. When you run ARV × 75–80% − repairs, repairs means scope plus contingency. An investor who prices on the bare scope and “keeps the contingency in their head” has overpaid for the house by exactly that amount.
How hard-money rehab draws change your cash plan
With hard money, the rehab budget sits in a holdback and is reimbursed in stages — typically 3–8 draws, each released after a third-party inspector verifies the phase, with the inspection usually inside 1–3 business days and funds a few business days after. Interest accrues only on what you’ve drawn. The financing guide covers the mechanics and what the debt costs; I won’t re-derive it.
For the budget, it means you pay the contractor first and get reimbursed second, so beyond the rehab line you need working capital to float each phase for a week or two. Sequence the scope so each draw lands on a verifiable milestone — demo and rough plumbing, then HVAC and electrical, then drywall and paint, then finishes — and request the draw the day the phase closes out. Underfund the float and the rehab stalls waiting on money.
Permits in DFW cities: what usually needs one
Every DFW city runs its own building department and fee schedule — Dallas, Fort Worth, Arlington, Plano, Garland, Irving, and Mesquite each differ — so verify with the city the house sits in before demo. As of 2026 the pattern is:
- Almost always permitted: electrical panel or service changes, HVAC change-outs, water heaters, re-plumbs, sewer-line replacement, foundation piers, structural work, moving walls, resizing openings. In many DFW cities, a full re-roof and a new fence too.
- Usually not: paint, flooring, cabinets, countertops, like-for-like fixture swaps that don’t move plumbing or add circuits.
Electrical, HVAC, and plumbing work must be done by state-licensed trade contractors — verify an electrician’s or HVAC contractor’s license free at tdlr.texas.gov and a plumber’s with the Texas State Board of Plumbing Examiners — and the trade contractor pulls the permit; the owner-occupant exemption that lets a homeowner work on their own residence doesn’t extend to a house you don’t live in. Permit fees vary by city, so check the current fee schedule rather than trusting a blog’s number; a typical flip budgets $500–$2,000 all-in, while a retail buyer’s inspector who finds an unpermitted panel or wall removal has just handed your buyer a renegotiation. Keep every permit and final inspection in the file.
Vetting a contractor — and what the marketplace already does for you
The contractor is the rehab budget. On a first deal, insist on a written, itemized bid against your SOW; references from investor clients, not homeowners; license and insurance verified, with a liability certificate naming you; a payment schedule tied to milestones, never more than a modest materials deposit up front; and a walk of a current job site — clean, sequenced, and crewed tells you more than any reference call.
The marketplace shortens this. Every deal page carries the vetted contractor network — contractors and trade specialists in each Texas metro we serve who have done work on these kinds of properties — next to the rehab calculator you built the scope in. You still vet, still get a written bid, still hold the contingency; you’re just starting from people who know what an investor rehab is. For how the deal pages, tools, and single-closing assignment fit together, read how buying from Diamond works.
The timeline, and what a slipped week actually costs
A cosmetic-plus-one-system flip on a DFW house runs roughly 8–12 weeks of work when it’s sequenced and the permits move: permits and long-lead orders (cabinets, windows, HVAC) in week zero; demo and cleanout first, so surprises surface in week two, not week eight; systems and rough-ins with inspections; drywall and paint; kitchen and baths; flooring, doors, trim, and exterior; punch list and finals. Add two to four weeks to close on hard money in front and 60–90 days to list, contract, and close with a financed buyer behind, and a realistic total hold is 5–7 months.
On the representative DFW flip in the financing guide — about $275,000 of project cost — interest, property tax, insurance, and utilities run roughly $3,000–$3,500 a month once the holdback is fully drawn. A rehab that slips from 12 weeks to 16 costs that much again before it costs you anything in the market, and the two most common slips are preventable: not ordering long-lead items in week zero, and finding a systems problem late because nobody camera’d the sewer in week one.
A sample scope of work: hypothetical 3/2 in a DFW first-ring suburb
This is hypothetical — a composite of the 1970s–80s brick ranches that make up a lot of DFW investor inventory, with round numbers to show the shape of a first-flip budget, not a specific Diamond deal and not a promise of what yours will cost. As a planning frame, and again as estimates rather than quotes: a cosmetic refresh that keeps the roof, foundation, and HVAC commonly lands at $25,000–$45,000 on a 1,500–1,800 square-foot DFW house; add one major system and it moves to $50,000–$80,000; a full gut with piers, a re-plumb, and new windows runs past $100,000. The sample below is the middle band.
The house: a 1979 three-bedroom, two-bath brick ranch, about 1,600 square feet on a slab, in a first-ring suburb east of Dallas. Original kitchen, two dated baths, single-pane aluminum windows, a 16-year-old HVAC system, a roof with about eight years left, two sticking doors (a Texas-licensed engineer calls it minor — monitor and fix drainage), a sound 150-amp panel, and cast-iron drains that passed the camera. Renovated comps within a half mile support an ARV around $330,000 at a mid-grade retail finish.
| # | Line item | Scope | Estimate |
|---|---|---|---|
| 1 | Roof | Repair, seal penetrations, replace damaged shingles | $1,500 |
| 2 | Foundation | Engineer’s evaluation; seal cracks; gutter extensions and grading | $1,200 |
| 3 | HVAC | Full 3-ton system; ducts tested and sealed | $9,000 |
| 4 | Electrical | Panel stays; GFCI/AFCI where required, fixtures, fans, smoke/CO | $1,800 |
| 5 | Plumbing | Water heater, supply valves, fixtures; camera already passed | $3,300 |
| 6 | Kitchen | Shaker cabinets, quartz, tile backsplash, stainless package, sink, lighting | $16,000 |
| 7 | Bathrooms | Hall bath refresh ($5,000); primary bath full redo with tiled shower ($8,000) | $13,000 |
| 8 | Flooring | LVP in living areas and kitchen (~1,150 sq ft); carpet in three bedrooms (~450 sq ft) | $6,500 |
| 9 | Interior paint | Walls, ceilings, trim; popcorn removal in living room | $5,000 |
| 10 | Windows / doors | Five worst windows; new front door; interior door hardware | $4,000 |
| 11 | Exterior / landscaping / fence | Trim and soffit paint; pressure wash; sod and beds; 60 ft of fence; gutters | $6,000 |
| 12 | Permits / dumpster / cleanout | Two dumpster pulls, demo and haul-off, mechanical and plumbing permits | $3,500 |
| Scope subtotal | $70,800 | ||
| Contingency (15%) | Held, not spent unless a line exceeds bid | $10,600 | |
| Rehab budget for the offer math | $81,400 |
Plug it in: $330,000 ARV × 75–80% = $247,500–$264,000, minus $81,400 of repairs = a maximum purchase price around $166,000–$182,000, before you decide where in that band the deal’s risk puts you. The contingency moved the number by about $10,000 — exactly what an investor who “keeps it in their head” overpays. What isn’t in the table — cost of capital, holding costs, selling costs — are the other lines in how to run the numbers on your first Texas flip.
Change one assumption and watch it move. A roof at year 15 instead of year eight makes line 1 about $10,500. A Federal Pacific panel makes line 4 roughly $5,000–$6,500. A collapsed drain under the slab makes line 5 $15,000–$30,000 and adds three weeks. Every one of those is knowable before you offer — that’s the point of walking the house first.
The bottom line
The rehab budget is the one input in the offer math you produce yourself, and it’s the one that kills first flips when it’s wrong. Walk the house in the same order every time. Write a scope by trade with quantities, not adjectives. Price the twelve lines against real DFW ranges as of 2026 and get the big-ticket items bid by a contractor who has walked the house. Pick the finish level the comps already paid for. Carry 15% and don’t spend it. Sequence the work around your draws, pull the permits, and order long-lead items in week zero.
If you want to build that scope against real inventory, the marketplace is free: every deal page has the rehab calculator pre-filled with our estimated scope, the vetted contractor network to get it bid, and the flip calculator to see what the budget does to the deal. Browse the live deals on the marketplace, or start with the investor overview and the markets on the buy page. Diamond is the assignor of the contract and the source of the tools; the scope, the budget, and the decision are yours.
Nothing here is investment, legal, or tax advice, and we are not contractors, engineers, or financial advisors. Every cost range above is a planning estimate as of 2026 for a typical DFW single-family house; your contractor’s written bid, and a Texas-licensed engineer’s evaluation where structure is involved, are the budget. Diamond Acquisitions (DACQ INC) buys houses as a principal and assigns its contracts — we are not a licensed brokerage and we do not represent buyers or sellers. Confirm the tax treatment of a flip with a Texas CPA before you commit capital.