Getting ducks in a row

Out of State Investing
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Getting ducks in a row

Nick Cikity
Realtor · Las Vegas, NV · Member since 2019 · 28 posts · 18 votes

I'm narrowing down the markets I'd like to invest in. Depending on which market i pick the strategies will be long term rental, flip and or BRRRR.

As an out of state investor, would it make more sense to form an LLC in the state your profiting in or just pay the foreign entity fees and keep your LLC in your home state? Additionally, if forming the LLC in the out of state market, who would you select as the registered agent?

Thank you,

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1w

I would set it up in my home state and then register as a foreign entity in another state, but it's really $6,500 the other period. In regard to a registered agent, I use virginiaregisteredagent.com, but if you just put your state name, then registeredagent.com, I believe it's $49 a year.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1w

    I would set it up in my home state and then register as a foreign entity in another state, but it's really $6,500 the other period. In regard to a registered agent, I use virginiaregisteredagent.com, but if you just put your state name, then registeredagent.com, I believe it's $49 a year.

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    • Nick Cikity
      OP
      Realtor · Las Vegas, NV · Member since 2019 · 28 posts · 18 votes
      1w

      Thank you @Chris Seveney . When you say, it's really $6,500 the other period, what are you referring to? Thank you again

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  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    1w

    Good question, Nick, and it's one worth settling before you buy. The usual trade-off is this: if you form the LLC in your home state and own property in another, most states will still require you to register it there as a foreign entity, so you can end up paying fees and filing annual reports in both places. Forming directly in the property's state avoids that doubling, but then you may still need to register it back home depending on where you live and operate. Annual fees and rules vary a lot by state, so it's worth pricing out both setups for the specific market you pick.

    For the registered agent, most out-of-state investors I know use a commercial registered agent service rather than a friend or a family member, mainly for reliability and so the filing address stays private. Since entity structure, liability protection and tax treatment are fact-specific, I'd run the final choice by a real estate attorney and a CPA who work in that state. Happy to connect and compare notes as you narrow down markets.

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    • Nick Cikity
      OP
      Realtor · Las Vegas, NV · Member since 2019 · 28 posts · 18 votes
      1w

      Thank you @Jimmy Lieu that's pretty much what I've been hearing and seeing. I'm in Nevada, it's great being in a no state income tax state but doesn't help when investing out of state. At the beginning I believe I'll register in the state I choose and use a registered agent as you suggest. If all goes to plan and it grows large enough maybe I'll form a holdco in nevada and structure it to take advantage of the no income tax.

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  • Divin KanyamaBusiness Member
    Accountant · Seattle, WA · Member since 2025 · 644 posts · 272 votes
    1w

    Great questions, @Nick Cikity. The best structure usually depends on the specific market, your strategy, and the rules in both states.

    In many cases, an LLC formed in your home state still has to register as a foreign entity where the property is located. That can mean paying fees and filing reports in both states. Forming directly in the investment state may simplify local compliance, but it does not automatically eliminate home-state tax or filing obligations.

    Before deciding, I would compare formation and annual fees, state taxes, lending requirements, liability protection, privacy, and whether separate LLCs may be appropriate for different properties or strategies. A local real estate attorney and CPA familiar with both states can help determine the most efficient structure.

    For a registered agent, I would generally choose a reputable professional service with a physical address in the state, reliable document handling, prompt electronic notifications, transparent pricing, and experience supporting real estate investors. I would avoid selecting someone solely because they are inexpensive. This is general information, not legal or tax advice.

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    • Nick Cikity
      OP
      Realtor · Las Vegas, NV · Member since 2019 · 28 posts · 18 votes
      1w

      Thank you @Divin Kanyama . I'll have to get ahold of a good CPA and see what they're thinking. The registered agent route seems to be the best bet so far for the other part

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    1w

    Nick, I'd probably decide the investment strategy first and then build the entity structure around it rather than choosing the LLC state first.

    LTRs, BRRRRs, and flips can have very different tax treatment, so I wouldn't automatically put everything into one LLC just because it's simpler. If you end up doing flips regularly, for example, I'd want to evaluate the active business separately from the long-term rental portfolio.

    I'd also look at where you expect to buy, how many properties you want to build toward, whether you'll have partners, and how quickly you plan to scale. Those factors can matter more than simply choosing the state with the cheapest LLC fees.

    If the flipping side becomes a consistent business, an S-Corp may eventually be worth evaluating as well, but I’d base that on the actual profit, volume, reasonable compensation, payroll costs, and your overall situation rather than setting one up from day one.

    I’d have the attorney handle the legal/asset-protection side and the CPA model the tax side before you start forming entities. Getting those two aligned early can save a lot of restructuring later.

    Feel free to DM me, I’d be happy to send over a few resources that might be helpful. 

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    • Nick Cikity
      OP
      Realtor · Las Vegas, NV · Member since 2019 · 28 posts · 18 votes
      1w

      Thank you @Ashish Acharya . I'll have to reach out and find a good RE lawyer and CPA familiar with both my states. That seems to be the most logical first step. I'll run the scenarios by them as far as flips, brrrr's and LTR and see what they suggest for each.

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    1d

    I think you should pick the strategy that best suits your availability, personality, expertise and risk-threshold.
    Once you hvae the strategy, then you should select the market.

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