I suppose that, given in which state the LLC is domiciled/incorporated, I'd have to file a state tax return for those states.

This is more for future financial planning, but it will incorporate REI for the meantime.

Even though I believe rates have peaked, and when they come down we will see another bull run in housing values, I think there is lots of uncertainty and people should make sure decisions work still when they incorporate downside risk into their underwriting. 

The good news is that in Illinois the cost of incorporating has gone down significantly.

It would be great to hear your opinion on whether the franchise tax would be owed in the structure I describe there, which could perhaps be incorporated into Klemens’ structure here to improve the chances of him never seeing a franchise tax bill IMNLO ( in my non-lawyer opinion :)thanks, Rob

Should I incorporate into a business and if so which state do I file that in also what kind?

You should have an attorney create your Articles of Incorporation and Operating agreements.

C corp is very picky on how you can use funds.All original incorporations are C's, you then file the extra paperwork to become an S.

I love MAS90 for construction industry but I am a long time Quickbooks advocate for people since it is more graphical and easier to use.

There will be legal and accounting matters to incorporate in your company, see local professionals with what you want to accomplish. :)