Does the number of hulls in collision affect performance?

As a general rule the simpler the collision the better performance you will get out of it. You should really consider importing your meshes with a custom collision as the engine rarely auto-generates good collisions.

You’re not going to notice any drop in performance from 1 object with lots of collisions but you will notice it if you have tons of objects with poorly optimized collision.

http://i.imgur.com/mSaRFFm.png

So if I set the Max Hulls to 24 instead of the default 4, how much does it affect overall performance?

What software would you recommend I use to create collisions

Whatever modeling package you use to create your assets. I use blender becasue its free but you could easily use any other package that allows FBX exporting.

Here is the unreal documentation for the static mesh pipeline and collisions:

This video will show you how to export collision from blender but the workflow is pretty much the same for every other program.

Thank a lot for your help