Investing Out of State from CA - What About Taxes and Liability?

[Brant Jones]

I live in CA and so far have only owned rentals in CA. I am looking to invest in small multi-family properties out of state (WI and/or IL), 50/50 with a partner, for better returns, and am curious how others in CA are structuring their legal entities (i.e. LLC in CA or the state in which you invest), and how investing out of state affects your tax situation (i.e. do you pay income tax both in CA and the state in which you invest, just CA, or just the state in which you invest)?