Buying Rental out of state from California

[Aj Puthillath]

I am new to real estate investing and have been actively looking for an investment property in the San ANtonio/ Austin area . I am based out of California.

Can anyone suggest the best way to do this to avoid tax confusions - maximize tax benefit - I am thinking of a sole owner LLC ?

I would appreciate any california investors to chime in 

Thanks

[David Faulkner]

Own it under your name as a sole proprietorship. Get an appropriately size umbrella policy for protection. If you go with an LLC, not only will financing be more challenging, but you will also incur an additional $800/yr CA state franchise fee ... it does not matter if your LLC is registered in TX ... if you live in and pay income taxes in CA, they want and will find you to get their fee. BTW, Texas has some of the highest property tax rates in the nation, while CA has some of the lowest (especially considering prop 13). Just one of MANY reasons to stay local with your investments rather than venturing out of state.