Generally, Distributions are paid from profits that have already been taxed at the personal-level since IRS Schedule K-1 flows through to personal return.

It's all about balancing immediate profit versus long-term wealth-building potential.  

You also must allocate all expenses based on the proportion of time spent, allocating the expenses between your personal deductions and the rental property profit and loss

Will landlords who are barely profitable as it is sell?

You're in business to make a reasonable profit without exposing yourself to liability.

Changes some of my answer below, but here would be most of the types of transactions you would have in these accounts and between them.Property transactions would be: all property specific rents and expenses, allocated expense transfer to the master LLC and transfers to master LLC bank account for profit AND/OR property management fee.Master LLC transactions would be: Shared expenses going out, reimbursements/transfers from properties for their allocated share of those expenses coming in, the transfers from your properties deemed as profit AND/OR property management fee and then transfers to your personal accounts deemed as owner distributions.Other transfers that could occur is if the master LLC needs to transfer to the properties for capital expenditures above and beyond the reserves you might leave in their accounts.

If you are building to sell and your profit margins are higher for the larger units, that may be a good argument for building bigger.My rentals are in central and east Phoenix, so we have a lot of young professionals and small families we rent to. 

The $12,000 profit from Rentals 1 and 2 would be offset by the $15,000 loss from Rental 3.Hence, the $3,000 loss cannot be deducted against your other income because your AGI exceeds $150,000.

I grew up with a realtor for a mother, but she’s not too well informed on new construction.As it stands today, I have roughly 70k liquid and looking to invest in building a new construction home for profit.

Everyone would like to own class A property, however, the problem is that most of those places are NOT profitable for renting.