As to the most efficient setup;
First, define what you want to do. No offense people but, I can't believe how haphazardly people set up business structures with superficial thought given to an overall plan.
You'll find in RE that no one just does one thing but you'll need to accomplish several strategies. A landlord buys and will at some point sell, they will finance, manage, repair, renovate, they may employ others to find properties, the may end up doing lease options, seller financing, you might sell the note, you might find a heck of a deal and decide not to hold it but flip it....you get the idea.
A capital company can do all of these things as the top of a pyramid or on a lateral structure.
Besides comingling funds another way to blow up your corporate veil is to operate outside the purpose of the initial stated business. While every attorney drafting any filing will utilize the catch all phrase...to do all things necessary and related...(or similar) you can easily get into other business operations that can change the flavor and business code of what you did. For example, if you have 5 rentals your net income won't be that much, you buy another property and six months later sell it, you could make more from the sale than you do from rents....I know, not a great example, but it was quicker....
IMO, it's better to actually itemize what you will be doing by category, buy, sell, trade, lease, rent, manage, finance, repair, renovate, demolish, construct, finance and let contracts to accomplish the same, admit partners and investors, affiliates and contractors, brokers and agents of all kinds as necessary to carry on the business of real estate related activities and to do all things thereafter necessary and lawful to conduct same. (Just off the top of my head people as an example)
Now, look at each of those functions and what might be involved with such aspects and address them in your Operating Agreement or By-Laws. Take "investors" for example, how do you admit them? When does that relationship end? What rights do investors have, do the vote? How will distributions of capital be made between investors and other members or stockholders, officers and directors?
Take care not to be so specific in areas that you become restricted in operations, but address areas in general to show the intent to accomplish other aspects rather than looking like you just operate on a lark, spur of the moment and on tangents. Keep the doors open, but at least hang the doors to a frame work.
I'm not going to compete with Dion for the longest post....LOL, but I'm totally against one property one LLC, that is expensive and totally unnecessary in any state. More to keep up with and it increases the chance of the corporate viel being trashed, you're not just maintaining one or two companies but maybe a dozen...it's a myth to think you are safer. If the viel is perieced in one asset poor LLC liability goes to you personally, from ther it goes to everything you own, including all the interests you have in all of your LLCs! This multiple LLC stuff is for attorneys to clean up messes later. Want protection, do two things, pay attention and get insurance!
I'd guess that in the early 90s, most single family rentals were individually owned, no business entity at all, people managed in complaince with laws, maintained properties so no one fell through the floor, kept hazards away and carried insurance. Your ability to act prudently in your dealings is your first line of defense, insurance is second, if those are sufficient you'll never get in a personal bind.
Bill Gulley, General Real Estate Academy