Hi, Vu!
Welcome to Bigger Pockets - and to Real Estate Investing in Cali-vada!
You note that you are interested in Reno - but, Las Vegas is only 5 hours away from Fountain Valley by car - consider the 2 million pop. center versus the (admittedly growing) half-mill Reno Area (it is 'the Biggest LITTLE City in America' for a reason).
I am very encouraged that you are first discussing the legal form of your investing entity, as this is the foundation that must be solid for your business success. However, you should note that the path you are contemplating (a CA LLC + whatever it takes for it to do business in Nevada) may be needlessly expensive.
But, before you contact the Nevada Secretary of State, as Michael and Bill advise above, with the questions you may have now - please get for yourself the information you need to be able to ask the questions you will have after you study it - from a relevant knowledge base. Then address Michael's and Bill's excellent points!
Now THE FOLLOWING NOT LEGAL ADVICE! I am not a lawyer and I do not play one on TV. This is management information, only. Please seek competent legal counsel before acting on it or any other such suggestions you may read here or elsewhere.
Getting appropriate information you need is not really that hard. Just go to its official source (the relevant law) and then, after you have made your business/management decision on the best direction for you, get appropriate counsel from competent legal professionals. Do it in that order, though, or the lawyers will make you do their idea of what is right for you. Be open to their suggestions on any change in direction and the reasons for these that they may have - but, stay in control! Thoroughly understand what they are suggesting and why it really is best - for your business, your goals for your business, and your reasons for being in business. After all, it is your business - not theirs.
So, start your pursuit of relevant knowledge by Googling: NRS 86 (Nevada's LLC law), the California Revised Uniform Limited Liability Company Act, and the California Franchise Tax Board (navigating the sites you select to find the requirements of the law on how LLCs are treated, taxed, and charged fees for earnings and 'doing business' within and outside of the state of their formation and operation). Thoroughly read the '.gov' sites on the first google-response pages you get with each of these search terms. You will find that:
If you set up a CA LLC, you will have to pay all of the fees to set it up and file, get and pay for a registered agent in CA to receive all of your legal papers, warrants, summonses, etc. - i.e., be the 'legal you' in CA - and pay CA taxes (maybe both business and personal taxes - depending on how you elect to have your LLC considered - as a corp or a partnership) on earnings and CA franchise fees for the privilege of doing business in CA whether your LLC earns or does business inside CA or outside of CA.
As you are presently intending to invest in Nevada through an out-of-state entity (your CA LLC), you will have to also register your CA LLC with the NV SOS as a 'foreign' entity and you will have to get and pay for a Nevada registered agent to be the 'legal you' in Nevada. Please note that this foreign registration costs about as much as simply forming a Nevada entity. Also note that Nevada does not have any such Franchise Tax Board or fee for the privilege of doing business here as does CA. We do have business taxes, though - for which your business tax liability kicks in as soon as your entity begins making $4 MILLION a year.
You are already (rightly) contemplating an on-scene, property management company, as the distance from Fountain Valley to either Reno of Las Vegas is probably too great for you to effectively or efficiently perform the necessary day-to-day property management functions. And, of course, with them, you will need a local Power Team of other professionals to advise and do the work they can do better than you can yourself in each of your business' management and operating locations - the one from which you run your business and the one(s) in which you have your property(ies).
But, consider this: unless you have a really good reason to 'manage your investments' from home in Fountain Valley (i.e., 'do business in CA' -- conduct all of your investment mechanics, decisions, actions, etc.) - why not just do these things in Nevada, too - and not pay for your investment management entity set-up and annual maintenance - and your corporate power team twice? ... and not pay the CA FTB franchise fees?
You have to travel to your investment focus area in Nevada (Reno or Las Vegas) for your LLC's REI business reasons anyway -- to learn the investing climate and market there (I would urge you to attend the local REI associations and/or clubs for your investment focus area(s)), to build your local power team, to learn the neighborhoods, examine potential 'next investment' properties, and conduct your due diligence on any property you intend to purchase.
For less than the annual CA franchise fee, you should be able to add the few other top-management actions your REI business needs to these trips - and/or make the few more trips a year (to Las Vegas - a quick, five-hour drive up I-15 with a stop in Baker for lunch at the Mad Greek - or short, cheap flight to Reno) to do everything else you have to do to manage the top-level, non-day-to-day things your business requires - from your phone and laptop on the desk you borrow in your NV resident agent's or your local property manager's, or power team-member realtor's office during business hours. Oh, and wouldn't these top-level, management actions trips (and the Mad Greek lunches - or 'Awful Awful' burgers at Jerry's Nugget in Reno - and other 'reasonable entertainment') also be business expenses?
i would recommend that you (with a competent CA tax attorney who is also licensed to practice and competent as a tax attorney in Nevada) explore simply forming a Nevada LLC and making all of your REI business decisions outside of CA (i.e., so you will not ever be 'doing business in CA' - regardless of where you live).
A Nevada LLC will provide as much - if not more - liability protection as a CA LLC investing in NV would - and perhaps get friendlier treatment than a foreign entity and for far less overhead.
If you continue to live in CA (with its rather high personal income taxes), either the CA or NV LLC can be regarded and taxed as corporations or as pass-through entities - with profit and/or loss coming to you as a 'member' of the LLC - which either is 'doing business in CA' (and subject to the CA FTB fees) - or is NOT 'doing business in CA' (and thus, exempt from the fees of the CA FTB).
I wish you the best of reliably informed and legally advised business acumen - and the business success it will bring, Vu!
