BiggerPockets

I'm trying to figure out the best entity for CA resident/investors that want to invest both in and out of state. I know a California LLC is required to pay 800.00 a year annual tax. I am already doing that with one LLC I own for a non REI business.

Are the California investors here using California LLCs, or perhaps Delaware Series or Nevada LLCs instead?

It looks like the Delaware Series is the way to go for multiple properties. But that I'd still have to pay the 800 per year to California because I reside here.

I am currently shopping for a good attorney, too.

~Matt

Thanks Taz -

I will research that option. That sounds like the best way to go so far.

Matty,

Since you are doing your transactions in California you will be subject to the franchise tax. If you set up your LLC in a state such as Nevada or Delaware that provides anonymity, that anonymity will be lost once the LLC foreign files to do business in California.
I would not recommend a series LLC. California requires an $800 franchise tax fee for each series in the LLC.

But what if a California resident wants to set up a Nevada LLC just to protect his or her personal assets (like CD's) from frivolous lawsuits, not to do business in California? I read about something called a Nevada Investment Holding LLC. It does not require a business purpose to be formed, unlike California. It can be operated as "an investment holding company" or "an investment management company" and simply "hold and manage" assets. In this way personal assets can be protected from judgments. Wouldn't this kind of LLC be exempt from the Cal franchise tax since California does not offer this kind of LLC, and is this type of LLC a legitimate entity?

According to Legal Ruling 2011-01 of CA, if I manage an foreign LLC I must register it at CA and thus loose the benefits of say Nevada LLC.
""If the activities of A or B constitute "doing business" in California, X and Y are also "doing business" in California due to their ownership of the disregarded entities. As a result of "doing business" in California, X and Y have substantial nexus with California.""

I heard that there's an option of creating a CA partnership to own the LLC, but my CPA is not sure its going to work.

Any recommendations?

My understanding on this subject is limited but I've been researching land trusts after listening to speaker at the Womens Invest Club in OC on Wednesday.

It might be worth looking into.

Again do not take my info as accurate but here is a rundown as I saw it. Setup purchase of property, have your attorney be listed as title holder. Setup land trust, setup out of state LLC, transfer property into land trust with your out of state llc as the beneficiary.

I am dead tired from being on the road and my understanding is limited at best. Do your homework on this.