Questions about using an out of state entity for real estate investment

[Andy K]

Hello folks,

I had a few questions about what entity to use for fix/flip and holding rental properties. I have read many articles on-line, but I am still have some doubts. I think a number of folks on the forum must be in similar investment situations, hence I decided to ask my questions here.

I live in California and I am planning to flip or hold long-term rental properties OUTSIDE California for now. The articles I read suggest using a LLC for holding rental homes, and a S-corp for flipping properties because there are advantages to use the entities this way.

The only entity I presently have is a Nevada S-corp. I don't have a LLC formed as yet. Below are my questions -

1. Are there any real disadvantages to holding long term rentals in a S-corp as compared with a LLC? Or should I be fine tax and other wise holding long term rentals in the NV S-corp?

2. If I mainly plan to invest out of state (and not in CA), do I still need to use a California S-corp or LLC? Or I could use the Nevada S-corp that I already have? Can I run into any issues tax wise in my home state if I use a non-California entity?

3. If I have a corporation from Nevada, but I invest in say Illinois and Texas. Do I need to record my S-corp as a foreign corporation in all the states where I buy/sell property? This S-corp will only be used for investing in real estate, and not for any other business activity.

Any guidance on above questions is very much appreciated. Thanks.

- Andy.