Some experience in RE, but branching out, nonresident, buying RE in TN, form LLC in TN, or big 3 States, or not at all?

[Matthew Mueller]

I apologize if this issue has already been explained, and also for the length of this post. I searched all over the forums and found a few mentions but nothing comprehensive. I have also been reading for a few months general ideas on BP and still can't come up with a best strategy.

Bottom line: I have some experience in LLCs and real estate, am a resident of PA and have a partnership LLC with MFH there, but I need some advice for a new venture.

I am interested in expanding on my own, ideally to look for SFH in a few southern markets, namely in TN, GA, and possibly TX, in that order. My current PA partner would not be involved.

My questions are really about TN. Having attempted to study strategy for a while on this subject, it is looking more and more like setting up an LLC in TN is a bad idea because of the 6.5% franchise tax.

It is looking like going the DBA route is ideal, but I don't really understand the mechanics of it, in terms of whether or not to use my SSN for the 'entity' since I understand there could be significant liability involved.

Also, my wife has large graduate school loans, and I attempted to get umbrella insurance on our former primary residence in MA when we moved out earlier this year, (currently living abroad) and was denied based on her history specifically with those loans before we got married- there have not been any credit issues for either of us since we have been married- me never any. Admittedly I only checked with one company after realizing that getting a renter's policy was more economical for that residence. Time that has elapsed since then has probably improved our chances, but I am still unsure.

If I cannot get umbrella insurance, can I not go the DBA route? What about incorporating in DE, NV, or WY? I think I would have to file a Foreign Corporation, which would only add to the paperwork and don't know the tax ramifications.

Admittedly these questions are more suitable for a RE attorney or CPA, but before I start paying billable hours, I want to get smarter on the topic in general so I know which questions to ask and have a hierarchy of choices in mind.

The closest post I could I find with an answer to my question was from http://www.biggerpockets.com/users/StevenHamilton @StevenHamilton : "In Tennessee you are much better off going the insurance route as entities will be subject to the excise tax. So unless your insurance costs are VERY higher you will be better off going the insurance route."

Many thanks in advance, and I hope to contribute to this community the more I learn.

Matt