This is one of the most common questions we get, usually from people hoping to run a dealership from home. Here's the honest answer.
Retail: you need display space
Texas Transportation Code §503.032 requires a retail dealer's location to have enough space to display at least five vehicles of the type you're licensed to sell.
Wholesale: no display space required
The same section says a wholesale motor vehicle dealer applicant is not required to maintain that display space. But wholesale still requires an established and permanent place of business, including a permanent furnished office and a conspicuous sign, and wholesale dealers sell to other dealers, not the public.
What about running it from home?
State rules about the permanent office and business location make a typical home setup difficult. On top of that, local zoning often restricts business use of residential property. Don't plan around a home-based dealership without confirming the current rules.
Sources
This guide is general business information, not legal advice. Texas requirements change. Always confirm current rules with TxDMV before you apply. Dealer License Pros is not affiliated with TxDMV.