Welcome to the board Vargha.
From your post I have deduced that you plan to stay in California and invest in property in Texas, that you are currently unemployed but do not feel that employment will be hard to find, and that you have no experience in managing real estate. Please correct me if I am wrong about any of these deductions.
Long distance investing in real estate is difficult. To buy a property, you need to be here to find the property, negotiate the sale price, close on the property, and find renters. After you have done that, then you will need to manage the property (fixing problems, collecting rents, paying bills, etc.) if the property is residential. You might be able to do away with a lot of that if you invest in commercial properties, but commercial has its own set of problems that can bankrupt you if things go wrong. Have you decided how you are going to handle these problems? I would suggest that you find a good property management company to handle the day to day transactions. A management company will reduce the profit that you make on the property and may actually cause the cash flow to become negative. Since I am managing all of my properties personally (and have a full time job), I have decided that I do not want any properties that are more than 30 minutes driving time away. That way when I get a call on Christmas morning saying that a pipe has broken on one of my houses, I do not have to spend all day going over to fix the problem or trying to find someone else to fix it for me.
Doing business as a foreign corporation has its own set of problems. Texas will tax you on the money that you make in Texas and California may tax you as well. I looked into creating a Nevada corporation and doing business in Texas, but it was not economically feasible. You might be able to set up a Texas corporation even though you are in California, but I am not sure about the requirements for “person of record”. They may have to have a Texas address. Also, I have been advised that it is not wise to hold more than $500,000 in real property in a corporation. It has been several years since I got that advise and have forgotten the reason, but it made sense at the time.
With all of that being said, let me congratulate you on your financial situation. It seems that you are about at the position now that I was 3 years ago (except that you are a little younger). I had decided that retiring with my current retirement program and medicare together would be just about enough to starve at a slow rate. I have since bought 4 houses, sold 1 and am in the process of selling another. The other 2 properties I am keeping for rental. I have a positive cash flow on one rental, a slightly negative cash flow on one, and own mortgages on the one that I have sold and will have a mortgate on the second. The propety that I have a negative cash flow on will be improved this year to have a positive cash flow. Eventually, this property will have a positive cash flow of approximately $1500 per month if everything goes as I plan. My goal is to have a $10,000 per month cash flow by the time I retire. I figured that if I buy 1 rental property per year with a positive cash flow, I can sell half of them when I retire and pay off the mortgages on the others to get the cash flow that I need to live in my current life style without working.
Good luck with your investing.
Wilson