How to get a Texas dealers license without a lot.

I receive several calls a week from persons that ask, “How do I get a Texas dealers license without a lot.” Or they may say something like, “I want to get a dealers license but I don’t want to have a building”. I am also often asked, “Can I get a dealers license at my home”?

I want to let you know what Texas law requires in order to obtain a dealer’s license in the State.
First, I would like to give a quick overview of the difference between a Texas Retail Motor Vehicle Dealer License and a Texas Wholesale Motor Vehicle License.

Texas Retail Dealer License

A retail dealer license in Texas allows the person that is holding the license to sell vehicles one of two ways. You can sell vehicles “retail” on your lot directly to consumers, or you can sell vehicles “wholesale” to other licensed dealers. A retail dealer license allows you to sell both “retail” and “wholesale”.

Texas Wholesale Dealer License

A wholesale dealer license in Texas is a little bit different. When you have a Texas wholesale dealer license you are only allowed to sell vehicles to other persons that hold a dealer’s license. You can never, ever sell a vehicle to a person on the dealer lot that does not have a dealer license. So, a Texas wholesale motor vehicle license only allows you to sell “wholesale” to other dealers, never to a retail customer on the lot.

With that being said, there are some slightly different requirements required by the State of Texas when it comes to obtaining a retail dealer license versus a wholesale.

First, let’s go over the retail dealer license requirements. In order to obtain a retail motor vehicle license from the State of Texas you must have a building that meets all local zoning requirements. And, by the way, you can always find your local zoning requirements by contacting your city hall or county court house. Just ask for planning and zoning, then inform them of the address you would like to have your dealership at and they will inform you whether or not you can have a dealer’s license at that location. Texas requires all dealer’s licenses to be located in a building that meets all local zoning requirements. This is State law.

State law requires the building you use for a retail dealer license is enclosed and has an office with at least one desk, two chairs, internet access, and a phone that is listed in the dealership name. You must also have a sign that is visible to the general public that displays your dealership name in at least 6 inch or larger letters. The law in Texas also requires dealers to have a display lot that is large enough to display 5 vehicles of the type you are selling. In order to have a “retail” motor vehicle dealer license in Texas you must have a building and a display lot. If you do not have a building and display lot you will not be able to obtain a retail dealer’s license in Texas. This is the law.

How do you get a dealer’s license in Texas without a lot? You can become a wholesale motor vehicle dealer.

State law requires the wholesale dealer to meet many of the same requirements as a retail dealer, such as, you must have a building that meets local zoning, you must have a business sign, you must have an office in the building that has at least one desk, two chairs, internet access, and a working telephone that is in the dealership name. However, wholesale dealers in Texas are not required to have a display lot. This would allow you to have a dealer license without a lot. However, you must still have a building that houses an office. And remember, wholesale dealers can never sell vehicles to customers on the lot that do not have a dealer license, vehicles can only be sold to other licensed dealers.

I speak with many, many persons every week, whether on the phone, on a zoom webinar, or in one of my live training classes that I hold throughout the country and I often hear the statement like “I want to start with a wholesale license, learn the ropes, then upgrade to a retail license later”. I never recommend starting with a wholesale license and then upgrading to a retail license because, in my opinion, these require two totally different kinds of dealer operations. In just a moment I will let you know how to get a dealer’s license at your home.

Think about one way a wholesale dealer must operate. If you obtain a wholesale dealer license you can get into dealer auctions and buy vehicles at wholesale then must sell them to other dealers, never to customers on the dealership lot. Why is a dealer that has the opportunity to buy vehicles at wholesale prices at a dealer auction going to buy the vehicles from you for a higher price that they could of at the dealer auction. Dealers, like you, are smart. They study wholesale pricing and it is very easy for them to find out what price you paid at the dealer auction for the vehicle that you are trying to sell them at a markup.
This is not a proven profit strategy.

Another way wholesale dealers operate is by developing a relationship with at franchisee in order to purchase all of the trade ins they do not want to display on there lot. Developing relationships with franchisees can take years. Many franchisees have certain wholesalers they have worked with for years and may not be interested in selling vehicles to the newest wholesaler on the block. To really make money you will need relationships with multiple franchisees.

Your relationship with a franchisee can be a very volatile one. What I mean by this, you could work years to keep a trade in purchasing relationship with one franchisee, then another wholesaler comes along an offers to buy there trade ins a much higher price, then they may call you one day and say “thanks but I know have another buyer that I am working with” and now you no longer are buying that franshisee’s trade ins. I know of a very small handful of wholesalers that make a great living and have several buying relationships with franchisees, but they are not the norm. I know of very few wholesale dealers that are making a lot of money however, retail dealers tell a different story.

Now, think about how a retail dealer works. You obtain a Texas retail dealer license, and you can buy vehicles wholesale at the dealer auction, mark them up, then sell them at retail on the lot and the world is your market. You are never limited to just selling vehicles to other dealers, you can sell vehicles to anyone, whether they have a dealer’s license or not.

This really opens up your market and, in my opinion, gives you a much greater chance of achieving higher profits. You are never reliant on 4 or 5 franchisees for your income, you are reliant on the tens of thousands of persons that buy motor vehicles from retail dealers every day. I have been in this industry for many, many years and I always recommend starting with a retail license.

How do you obtain a dealer license at your home?

All of the same requirements must be met, whether you are applying for a retail dealer license or wholesale dealer license. You must have a building with an office, desk, two chairs, internet access, and a phone listed in the dealership name. You are also required to meet the sign requirement, and for retail dealers, you must have a display lot that is not part of a driveway. One exception is that the building you house your office in must be separate from your residence. In other words, the building that you use to house your dealer license must be a completely separate building that is not attached to your residence.

The building you use at your property must also meet all local zoning requirements, which is rarely allowed in a residential neighborhood.
So it is possible to have a dealer license at your home property but it must be in a building that is separate from your residence and must meet all local zoning requirements. If your zoning does not allow you to have a dealership at your home, I want to strongly encourage you to find a building that meets local zoning and obtain a retail dealer license.
I talk to persons all the time that do not want to find a building and lot to rent in order to obtain a Texas retail dealer license. I think any person that is not willing to make a small investment in a building and lot so they may obtain a dealer license are missing out on an incredible opportunity to obtain a dealer license and take their income to a whole new level.

You might find a property in your area that you can rent for eight or nine hundred dollars a month, or more. If you are not making an eight or nine hundred dollar profit on each vehicle you sell, then you are not marking your vehicles up enough. It is very much the norm in this industry to pay your entire month’s rent with one good sale. Then you can keep the profits from all the other sales in your pocket. So why would you ever hesitate to rent or purchase a building to get into what can be a very lucrative business.
We are approved by the Texas Department of Motor vehicles to provide you mandatory 6 hour dealer pre-license course, so when you are ready to make the move, click on blue Enroll Now button.

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Texas Dealer License

Delus Johnson-Lead Instructor
Automobile Dealer Training Association