In practice, separate entities should be separate.

I practiced in front of a mirror and my family for days.

Pricing is typically based on loan volume.These solutions will help with automating tasks related to complying with your state's regulations around private lending.

Is this a common practice? 

Roseville and Rocklin are great areas for long-term stability and growth, but the prices are quite high and the rents are LOW, and they're not friendly in terms of regulations for STR. 

If a legal issue arises with Property 1, only that property’s assets would be at risk, protecting the equity in Property 2 and any other properties you may own.Asset Isolation: Isolating each property in its own LLC helps protect your assets from creditors or lawsuits targeting a specific property, thereby providing a more robust legal shield.Financial Management and Bookkeeping:Regarding your concern about financial management and the practicality of handling multiple LLCs:Centralized Banking: Using a holding company’s business account and credit card can simplify your bookkeeping.

Does anyone know how it works and best practices?

Furthermore, what are the regulations regarding security deposit?

Additionally, I appreciate the note on Madison's strict short-term rental regulations for non-owner-occupied properties.

If it was built before, say, 1960 there may be a slew of electrical work you'll need to do to stay in regulations with current times and, of course, for the safety of a future buyer.