I'm not sure how it works in TX, but in NY sellers have to fill out what is called a Property Condition Disclosure and have to say whether or not there are any standing water issues (as well as a myriad of other things).  

(disclosure-I spent 6 years working full time as a foreclosure pricing expert for FNMA, etc)I agree with many on the discussion, take a look a conservative, yet reasonable estimates and determine if your ROI and cash on cash makes sense.  

Full disclosure will create trust.

Full disclosure, I work at HomeUnion.Gaurav, your advice to do your own research is a very sound one.

Being required by law to fill out a seller's disclosure and then being held liable for the information contained therein would set a dishonest seller's teeth on edge.

sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CEkQFjAA&url=http%3A%2F%2Fwww.liveinnewengland.com%2Foffice%2FStandard%2520Residential%2520Lease.pdf&ei=QCodU-bMC4jS0wGKjYGoCw&usg=AFQjCNGtfgjGTOpqFNxkmoQiXGCQhtqOzA&sig2=Y8q21tV4EX8iwaG7nVe20g&bvm=bv.62578216,d.dmQI add some addenda to mine (minimally make sure to get a copy of the Lead Paint disclosure) but this is the basic lease I use because people are comfortable with it.

I understand that I will need a right to purchase agreement with an 'assign to' disclosure so I'm able to 'sell' the contract to an cash investor.

I really like it as a in between between a Memphis and Atlanta  from my perspective the security issues are better there than a lot of Memphis and other areas. and the city has topography so lots of day lights and better bones .I will send you over contact of who I work with... but full disclosure J Benoit also does some stuff for us  not directly but through his management and sales efforts.Good people there in B ham. 

What's been said above about disclosure is true, and my belief is that a seller that needs to sell is not going to care about you disclosing. 

I am wondering if there is reliable  and effective software on the market for finding privately owned distressed houses, before these properties have been subject to formal disclosure action and have become publicly accessible knowledge.