I wonder how it is ending up with bad collision? What exactly was ‘bad’ about it? Was it massive? That doesn’t sound expected anyway. You can specify collision in the file (in FBX anyway, not sure about OBJ):
When you say you have to set the LOD or it will ‘distort easily’, what kind of distortion do you mean? Normally with no LOD set, it just won’t change based on distance, it just always draws the single LOD 0 that it has. Sounds like something weird is going on.
How are you creating this OBJ? Maybe you want the pivot adjusted in the asset before you import it?