Californian wants to buy Ohio property - Entity help?

[Mathew Deines]

I want to buy rental units in Ohio and I currently live in San Diego, CA. If I am keeping my 9-5 job and only collecting passive income, do I need to register/create a LLC in California and Ohio or just Ohio? My long term plans include investing in other states as well.

It is $800 to register with the Secretary of State in California each year, so if I can avoid that, that would be ideal.

[Darrin Carey]

@Mathew Deines Everyone is giving you the right answer. If you are using an LLC, it needs to be in the state where the real estate is located. As @Nathaniel Busch said, you will also need to file a tax return for that state each year.

@Paul Lopez Dayton has good cap rates, and great cashflow. However, as with any area, it also has its pitfalls. Neighborhoods can change in just a couple blocks. 

Owner financed buildings may be an indication that the appraisal won't support the asking price. Or, it may be the owner simply wants to defer the capital gain. 

Either way, Boots on the ground is critical.