We set up our clients in 1 of 2 states, neither of which is Tennessee which is where our clients are holding real estate.Providing you are only holding rental real estate there are no out of state costs per se.The problem with setting up in the state you are buying can be, depending on the state, high costs of compliance, easy to pierce the veil, punitive taxes.

This is called "piercing the corporate veil" and allows a plaintiff in a lawsuit to go after you personally for liabilities incurred against your business.  

(You should also have a copy of the "Short Form" Trust available for any required third party reviews, such as loan applications and certain contracts.)In short, any failure to properly document, register, account for funds, or even something as seemingly unimportant as properly signing ANY document, can create an opportunity for "piercing the corporate veil" resulting in your personal liability with no recourse.I cannot count the number of times Clients have come to us with no idea how they should sign documents; insurance or tax filings that do not match the owner of record (or each other), and generally poor records of tenant agreements/payments.

I believe that would defeat the whole purpose of the llc (pierce the corporate veil)?

Welcome @Derek Dodd, I am based out of Thurston County, but I am also very interested in Lewis County as well as Mason, and Pierce Counties.

One sure fire way to pierce your corporate veil is co-mingling funds.

I believe a good attorney could pierce the corporate veil of MOST LLS's started by novice RE investors, mainly because the LLC is undercapitalized and the borrowers have a tendency to take money from one pot to the other without regard to the rules of the LLC. 

How would she personally get financing then move it into the LLC without piercing the LLC and without triggering the pay in full clause?

@Juan T.First of all having a relationship with your LLC will not pierce its veil and make you loose it’s liability protection.

Single member LLC's provide much less personal protection than most investors realize due to veil piercing doctrines in many states.