Consolidated K1s and state income taxes

[John P.]

I have looked at several different real estate investment funds to possibly invest some money. I won't name names as I don't think it matters.  For simplicity let's say they both invest in 5 states that do have state income tax reporting requirements.  For a small investment (let's say $100k) the incremental cost of my CPA preparing another state return takes away any value I get by the geographic diversification.  One of the funds said they do a "consolidated K1" and thus the investors do not have to file a state income tax return in those states. That sounds good to me.  The other fund said they do not do a consolidated K1 as that gets taxed at the highest rate and not all investors are at the highest bracket, have unique tax issues, etc....  Curious if anybody here has experience and/or knowledge on the consolidated K1?  Is it really as simple as by them filing that I don't have to worry about filing in those states?  TIA.