I notice that LOD materials haven't been mentioned yet, these are very important as the shader often takes more performance than the mesh. The materials in most engines, like Unity, also acts as a manager tool for performance optimization.

As a example, Unity batches objects that share the same material. Because a object that is far from the camera uses less pixels on screen you can reduce the size of there color texture to a very low value (64 by 64 works well) and combined them all on one large texture.

When all the small textures are atlased like this you only need one material for all objects, allowing all of the objects to be batched, this is the way games set in a city allows for so much buildings at a distance.

Make the detail LOD and lowest possible LOD first.

The detail LOD is the very high poly one, the lowest LOD is the least amount of polygon model that still has a silhouette that resembles the intended object; for a building the lowest LOD will often be a simple rectangular prism.

Once you have these two LOD levels you can make as many in-betweens you need.

Auto LOD tools suck.

Making hand made LODs works best. Most 3D software has a decimate tool or LOD tool these build in tools are often just as good as any paid LOD tool, or just as bad anyway.

A LOD should change unnoticed, auto LOD tools often cause sharp edges or "jumpy" points that draws the players eye when it's mistaken as movement.