Hi Everyone! I would appreciate if any accountants, lawyers, etc. can shed some light on the implications that arise from being a CA resident who invests out-of-state through a business entity such as an LLC.

I want to create an LLC to invest in out-of-state multifamily rental properties (to hold for a long period of time, possibly forever). My question stems from the fact that an LLC can be treated as "foreign" or "domestic" depending on where it was created versus where it does business.

Please correct me if I am wrong: In this example, I live in CA but want to buy property NOT in California.

If I create a California LLC but purchase property out-of-state (let's say Colorado), I would be operating illegally and be subjugated to the appropriate fines. In order to adhere to the law, I would need to refile my (domestic) California LLC as a foreign LLC operating in Colorado - resulting in double taxation, right?

Related questions:

1. Am I limited to only creating LLCs in the state that I reside in and how does this affect my ability to open business checking/credit accounts with a bank? 

2. What is the most effective method to make sure I am following the law as I purchase property that is NOT in California?

Not sure if this is important to note, but I will most likely be taking advantage of seller financing and will not need a conventional loan for 75-80% of the property's value. I see more opportunity to invest in landlord friendly states, so I plan on doing so! 

To everyone who has read through this far, I appreciate you and am eagerly looking forward to hearing your thoughts! 

Thank you,

Sahaj Bhakta

Aspiring Real Estate Investor