Even if you create a non-CA LLC, if you are managing the business from California, you will likely be deemed to be "doing business" in California and therefore likely subject to CA taxes.

I have seen insane assessments or even lawsuits against the management that cause problems on all sides. 

I am based in Denton TX, and I am looking into out of state investing.

REI Nation manages 7,964 single-family rental homes in 13 U.S. markets, including Memphis, Dallas, Houston, Little Rock, Oklahoma City, and Birmingham. 

There also seemed to be a lot more room to renegotiate management or purchase contracts versus residential where people tend to tell you things are set in stone. 

My PITI + PMI is $2,369/month if I get 30yr fixed at 7% with 5% down.I'm budgeting 5% capex/ 5% repairs / 8% vacancy and I will self manage. 

You will probably have some sort of limit regarding mold/medical, but thee things can turn into a mess, trust me, I manage a lot of units and have done so for almost 30 years. 

I'm talking about nice charcoal 2x2's and ivory, etc. and I have never paid more than $.25/ft for 2x1 and 2x2 foot tile which sells for $3-6 per ft at the Big Box.The second thing they have in abundance are bathroom vanities.

I pay seller over time and I will pay the mortgage myself which is subto.

I know I can make some cash flow out of the property and I know how long it will take to be able to refinance it.