How to Wholesale Real Estate in Texas (2024 Updated)

This article will give you step-by-step information on everything you need to know about wholesaling real estate in Texas, even if you have no experience and a minimal budget.

We will share details on how wholesaling works in Texas, legal basics, and various ways to close wholesale deals.

Keep reading to get started with real estate wholesaling in Texas.

Is it legal to wholesale real estate in Texas? The short answer is yes, if done correctly.

There is no such thing as Texas real estate wholesaling laws. However, what you can and what you can not do as a wholesaler is regulated by the Occupations Code, Texas Administrative Code, and Property Code.

One of the main risks of wholesaling real estate is having your activity considered engaging in real estate brokerage.

When wholesaling real estate, you cannot act as a real estate agent. This means you may not list and market properties for sale to the general public.

To act as a real estate agent in Texas, you must have a real estate license. However, you don’t have to have one if you are acting as a wholesaler as long as you properly disclose the nature of the deal.

Excerpts from Occupations Code, Section 1101.0045 – Equitable Interests in Real Property:

A person may acquire an option or an interest in a contract to purchase real property and then sell or offer to sell the option or assign or offer to assign the contract without holding a license issued under this chapter if the person: (1) does not use the option or contract to purchase to engage in real estate brokerage; and (2) discloses the nature of the equitable interest to any potential buyer.

A person selling or offering to sell an option or assigning or offering to assign an interest in a contract to purchase real property without disclosing the nature of that interest to a potential buyer is engaging in real estate brokerage.

According to the excerpts above, if you don’t have a real estate license, you must clearly state that what you are selling is equitable interest and not ownership interest.

Make sure to have your contracts contain proper language to protect you by consulting one of the best real estate attorneys in Texas.

Below is a concise explanation of how to wholesale houses in Texas in two legal ways plus how to do it remotely.

There are pros and cons of real estate wholesaling with each method, but the first one is the most common.

#1 Contract Assignment

Contract assignment is a more common way to wholesale real estate in Texas than the double closing method.

Even though it’s legally more intricate, this method allows you to wholesale homes without having to reserve the amount of cash equal to the full value of the property you are wholesaling.

However, you will still need one or two thousand dollars as an earnest money deposit.

Here is how contract assignment works. First, you find a motivated seller and sign a purchase contract with them, like if you were going to buy the property for yourself.

This contract states that you are the buyer. However, it also contains a clause that allows you to assign this contract to a third party (end buyer).

Here is an example of a clause that can be used in your purchase contract:

It is expressly agreed that this contract may be assigned at any time by Buyer before closing without prior notice to our consent by Seller. The effect of any such assignment will be to immediately relieve any person signing as Buyer of any further obligations under the contract. Seller unconditionally agrees to accept the assignee as Buyer and timely close without objection according to the terms of this contract.

Assigning a contract means that at closing, you give up on the right to purchase the property in favor of the investor who now becomes the actual buyer in place of you, in exchange for an assignment fee.

After getting the house under contract, you immediately start marketing it to real estate investors who would potentially want to buy your wholesale property. You have limited time to do this before closing.

The deadline before which you must purchase the property is indicated in the purchase contract. Usually it is 30 days but can vary from contract to contract.

In case you don’t find a buyer by the deadline, your purchase contract must also contain a clause stating that if the deal falls through, your earnest money deposit is refundable.

Note that you can’t list the property for sale and advertise it to the general public as this would be considered engaging in real estate brokerage activities, which requires a license.

You and the investor sign an assignment contract, which is a separate document from the purchase contract that you signed with the seller.

This way, you never buy the property and never have to pay the full price for it with your own cash.

At closing, you get your earnest money deposit refunded, and the investor pays you an assignment fee you agreed on.

To keep everything legal, this process, including the intent to assign the contract, must be disclosed to the home seller in advance.

Contract assignment requires specific language and disclosures to make sure your activity won’t be considered as the one of a licensed real estate agent.

If you haven’t wholesaled properties yet, it’d be highly recommended to add to your real estate wholesaling checklist an important item to find and partner with an experienced wholesaler.

Strive to close your first deals under supervision of an experienced real estate investment mentor who will assist you in wholesaling real estate step by step.

#2 Double Closing

The other option in the real estate wholesaling process is to do a double close.

In a double closing transaction, you personally close on the property, like in any normal real estate transaction. Then you, either at the same closing or shortly after, resell the house to the end buyer (investor).

Obviously, this method requires you to come up with cash for the full price of the property, have it ready at closing, and pay it to the seller.

If you don’t have cash, you can borrow it from Texas hard money lenders that offer transactional funding.

Transactional funding is a very short term loan specifically designed for double closing as well as other similar real estate investing transactions.

Despite the requirement to have cash at closing, the advantage of this method is that there is no way someone can accuse you of acting as a real estate agent while not having a license.

Another helpful tip for both of the wholesaling methods described above is to make sure to find an investor-friendly title company in Texas experienced with transactions involving double closing.

You want your title company to be familiar with real estate wholesaling transactions in Texas and all their intricacies.

#3 Virtual Wholesaling

You can practice wholesaling houses in Texas if you live in another state and even country.

Almost all of the steps in a regular real estate wholesaling process can be done remotely except for property walkthrough. Here is an outline of the process of virtual wholesaling in Texas.

First, you find motivated sellers. Look their property up online in advance by analyzing its market value based on local comps.

Contact the seller and make them an offer based on your estimate and what they tell you about the property’s condition. Ask them for pictures of the items requiring repair.

Email them a contract to sign via an electronic signature software or have your assistant deliver it to them physically. The contract must contain an inspection contingency clause.

An inspection contingency clause states that in case an inspection reveals major problems with the house’s condition, the price and other terms in the contract may be adjusted or the contract may be canceled with the earnest money deposit fully refunded to you.

Then, you either hire a Texas home inspector or ask an investor (your end buyer) to walk the property.

At closing, your physical presence isn’t necessary. You can exchange documents and do bank transfers electronically.

It helps to have assistants in the city where you do virtual wholesaling — to meet with the sellers (not all of them are tech-savvy enough to exchange files electronically), inspect the property, communicate with investors etc.

Otherwise, you can use the services of Texas investor-friendly real estate agents and other pros.

But it is not a deal breaker if you don’t have local assistance. You still can run a very successful real estate wholesaling business without any ‘boots on the ground’.

To wholesale real estate in Texas, just like in any other state, you must have an ability to find discounted properties.

In most cases these would be properties of people who are in some sort of distress and need cash quickly.

It can also be people who own a property that they don’t need and neither do they have the time or money to maintain it.

Learn more about the main types of motivated sellers.

But how to find properties to wholesale? You have the three options listed below.

#1 Buy Texas Distressed Seller Leads

Successful Texas real estate wholesalers take advantage of using a proven third-party lead provider who already has a well-oiled process of generating inbound motivated seller leads in the state of Texas.

Usually, lead providers will charge a wholesaler on a pay-per-lead basis. The price per lead often depends on how competitive and hot your local real estate investing market in Texas is.

Using lead generation services for real estate investors may seem expensive at a first glance, especially if you are just starting. So, you’ve probably thought of generating your own leads.

But remember that besides generating leads, you have many other priorities that require your time, attention, money, and energy.

Dispersing these resources on too many tasks at once will ultimately lead to spreading yourself too thin, which will inevitably hurt your bottom line.

Lead generation companies specialize in generating leads as their primary business. This is the only thing they do on a daily basis.

Such focus, coupled with volume (marketing budget, split testing, etc), creates efficiency, which allows them to fine-tune their process to the highest level and which significantly drives the lead acquisition cost down.

This way they decrease their costs on producing leads to the extent that they can sell them cheaper than it takes their clients (especially newbies) to produce their own leads.

Therefore, unless you have mastered lead generation in your target market by investing considerable resources into it over the years, you won’t be able to get even close to the Cost-Per-Lead numbers that those lead generation providers are getting.

When looking for a lead generation service provider, consider REB Leads.

It’s a program created by Real Estate Bees which is designed to supply wholesalers with industry’s most affordable and highest quality motivated seller leads. Sign up for it now.

#2 Hire an Agency to Do Marketing for You

Another way to outsource marketing to professionals is hiring a digital marketing agency that specializes in real estate investor marketing.

The advantage of this solution is that digital marketers often provide multiple services. For example, they can develop and improve your website, grow your social media presence, and help with branding.

They can also build you acquisition channels for lead generation that will stay with you even if you stop using their services.

For example, a SEO-optimized real estate investor website that can generate motivated seller leads on autopilot.

But there is also a disadvantage of using an agency. Marketing companies often have too many clients and not enough staff to service them.

As a result, they may work on your projects less than they should while you keep paying them a monthly fee.

So if you are leaning towards this option, you have to be able to sift through overwhelming sea of bad agencies to find the only ones that do their job 100% right no matter what.

Luckily for you, since you are our reader, our team has already done all the heavy lifting for you. We’ve polled and surveyed thousands of our real estate wholesaler members and the overwhelming majority recommended Magnyfi, run by Jacob Hicks.

The service provided by Magnyfi is not cheap. But it is definitely worth it if you are serious about growing your real estate wholesaling business.

Go ahead and watch Jacob’s video presentation on the Magnyfi profile page discussing their methodical process they have been successfully helping other investors grow their businesses.

#3 Do Your Own Marketing by Yourself

You can develop your own wholesale real estate lead generation process. There are multiple strategies and real estate wholesaling software tools to do it successfully.

The most popular ways are:

• using bandit signs
• driving for dollars
• sending postcards
• using ringless voicemail tools for real estate wholesaling
• online advertising
• blogging

Some of the methods listed above are more convenient because you can do everything remotely. You just need a professional website and learn how to effectively utilize it to generate leads.

It’s important to select a solution that will allow you to create a user- and search-friendly website. Choose one from the best website templates for real estate investors currently available on the market.

Finding distressed properties is one part of the equation. Another one is finding real estate investors to wholesale them to.

There are different types of real estate investors acquiring wholesale properties in Texas.

They range from small local real estate investors to large national institutional investors and hedge funds with billions of dollars in their disposal.

The two best marketing strategies for wholesaling real estate are listed below.

#1 Build Your Own Cash Buyers List

To have a successful wholesaling real estate business in Texas, or anywhere else in the country, you need to build your cash buyers list.

A cash buyers list is a list of Texas real estate cash buyers who gave you their contact details and permission to notify them about investment opportunities that match their acquisition criteria.

Besides Texas real estate investors’ contact details, the list must also include information about the types of properties, target geographical areas, and other preferences the investors are interested in.

For example, one investor specializes in flipping luxury properties and another one is mostly interested in probate real estate. You want to send them deals that match their acquisition criteria.

Building a cash buyers list doesn’t happen overnight. It’s a continuous process. Fortunately, it can be significantly sped up by Real Estate Bees’ revolutionary invention — Property Marketplace Widget for Wholesalers.

It basically allows you to build your own cash buyers list on autopilot, and it’s the only online tool of this kind on the market.

What’s even more powerful is that this tool lets you syndicate your contracted properties directly to Real Estate Bees’ massive marketplace of wholesale deals for sale in Texas and instantly reach thousands of potential buyers!

#2 Leverage Other People’s Cash Buyers Lists

Another option to get to companies that buy houses for cash in Texas is using cash buyers lists that belong to others.

Other cash buyer list owners may allow you to contact their investors in exchange for about 50% of your assignment fee if you find a buyer through their list.

If you want to avoid giving away half of your profits while using someone else’s cash buyers list, you can use a robust property syndication tool developed by Real Estate Bees to help wholesalers with the disposition.

The tool lets wholesalers leverage Real Estate Bees’ extensive list of Texas cash home buyers to blast their contracted properties for free.

To take advantage of this cutting-edge functionality, create your free account and list your contracted properties.

You don’t necessarily have to have one. However, especially if you aren’t licensed, your assignment contract must contain special language making it clear that you aren’t providing brokerage services.

Make sure you aren’t engaging in activities that resemble what real estate agents do. For example, don’t list houses on the market to promote them to the general public rather than to investors.

Wholesaling with a real estate license may be beneficial as it would provide an extra layer of protection should you be accused of engaging in real estate brokerage activities.

Therefore, if you are also planning to get licensed, read this comprehensive guide walking your step-by-step how to get a real estate license in Texas.

For wholesaling real estate in Texas, as well as anywhere in the USA, you must be 18 years old or older.

The reason is that this is the minimum age required to enter in a real estate purchase contract. This is the only age restriction related to wholesaling Texas properties.

If you are younger than 18, you will have to partner with someone who would enter into purchase and assignment contracts for you.

Documents needed for wholesaling real estate in Texas are basically the same as documents required for a normal real estate transaction.

But if your preferred method to wholesale real estate is contract assignment, you will also need an assignment agreement.

Below are more details about each closing type.

Contract Assignment

You will need a:

• contract to purchase real estate that you signed with the buyer. It must contain the language that allows you to assign this contract to a third party. This verbiage must be properly written to make it clear that your activity can not be considered real estate brokerage services.

• wholesale real estate assignment agreement. It’s a separate document that you sign with the investor — your end buyer. This document specifies the terms of assigning the previous contract to the investor.

Double Closing

You will need two contracts to purchase real estate:

• one through which you purchase the property from the seller.
• another one through which your investor purchases the property from you.

It’s not necessary to have an LLC for wholesaling real estate in Texas. However, it’s the most commonly used business structure to wholesale houses.

LLC is easy to set up and is a simple structure to pay taxes with.

Creating an LLC or another type of corporation is one of the essential asset protection strategies for real estate investors.

However, the very fact of doing business as an LLC, will not be enough to protect you from a possible lawsuit and financial loss resulting from it.

You can work as a sole proprietor under protection of an umbrella policy, which isn’t less secure than having an LLC.

The most important benefit an LLC offers is presenting your company as a legitimate business.

Depending on the nature and requirements of your business, you can also create any type of corporation.

For example, if additionally to wholesaling real estate you also want to acquire a large number of rental properties, you may want to look into creating an S-corp.

The amount of money you need will depend on the method you choose to wholesale properties.

If you do contract assignment, you only need about $1,000-$2,000 for an earnest money deposit per transaction.

If you do double closing, you will have to have the whole amount of cash in your bank account to buy the property from the seller before the investor buys it from you.

In both cases, you can borrow money from Texas real estate lenders that offer transactional funding.

Compare loan rates from multiple lenders with just a few clicks.

Assignment fees vary depending on the location. For example, $10-15k is an average assignment fee for an average house in a neighborhood with an average property price of $150,000.

However, if the house you are wholesaling in the same area is worth less than average, the fee will be lower.

How good a market is for wholesaling real estate in Texas depends mostly on the city or even a neighborhood where you plan to operate.

To get an idea of the common Texas real estate market trends, review the thorough analysis of the Texas real estate investing market.

For wholesaling real estate in Texas, just like anywhere else, the best markets are the ones with a stable economy, population growth and affordable housing prices. In Texas, such cities include:

1. Houston TX
2. Dallas TX
3. Austin TX
4. San Antonio TX
5. Corpus Christi TX
6. Fort Worth TX
7. Huntsville TX
8. El Paso TX
9. Arlington TX
10. Plano TX

You should definitely educate yourself enough before taking on your first wholesale deal whether it is by getting a mentor, investing in a training program, reading books on the subject, etc.

There are a few main mediums to learn thoroughly about how to wholesale houses for beginners. But this doesn’t mean that you need to choose only one of them.

Courses

Courses are the most straightforward way to learn how to wholesale properties the right way from scratch.

When selecting a training program, make sure the instructor is an experienced wholesaler themselves who achieved the level of success you are after.

With all the online technology available today, it’s easy to create an impression of being an expert without having the actual results to show for.

To help aspiring wholesalers learn the profession from reputable experts, Real Estate Bees created this list of the best real estate wholesaling courses.

Check them out and choose one or more who you feel is a good fit for you personally.

Don’t save on education. Invest in yourself and your real estate investing career if you are serious about it.

It will save you thousands of dollars and countless hours in the long run as well as get you to your goal at a much faster rate than figuring out things on your own.

Mentors

Regardless of what you are trying to achieve or get good at, having a mentor, who already got where you want to be, is the fastest and most effective route!

In real estate wholesaling, it is no exception.

For newbie wholesalers, it’s always a good idea to get a successful real estate wholesaling mentor to teach you all the ropes of this rewarding business.

Of course, you will need to invest in having one of the best Texas real estate investment mentors help you learn the craft of real estate wholesaling. But it will be worth it in the long run.

Working under a mentor’s supervision will allow you to grow your business significantly faster. A coach will help you avoid pitfalls leading to losing time and money.

Books

A good method to expand your knowledge of wholesaling is reading books by authors recognized as leading experts in the real estate investing space.

Unfortunately, a book doesn’t offer you a direct line of communication with an instructor, unlike an interactive training program, which usually includes one-on-one calls, live group sessions, and other direct access to a coach.

However, there are about ten awesome books on wholesaling real estate that are worth reading regardless of whether you are a beginner or a seasoned wholesaler.

This list of the top real estate wholesaling books will help you take your education to the next level

Investor Clubs

Real estate investor clubs exist in any large metropolitan area, and even in some small towns.

By joining them, not only can you learn from other investors’ experiences, but you can also find cash buyers for wholesaling real estate.

Becoming a member of a club may require a regular fee — to rent a room for meetings and other expenses. But it’s well worth it, especially if you are starting to build your network.

Find a list of Texas real estate investment clubs here.

___

If you want to contribute your expert advice on a topic of your expertise, feel free to apply to our Expert Contributor Program.

___

About the Author

With over 20+ years of experience in real estate investment and renovation, Brian Robbins brings extensive knowledge and innovative solutions to the HouseCashin team. Over the years Brian has been involved in over 300 transactions of income producing properties across the US. Along with his passion for real estate, Brian brings with him a deep understanding of real estate risks and financing.