I think there is a time and a place for single bank.
We used a single bank for our early investing, we found it beneficial to be a big fish in a small pond by staying with residential business banking vs. going to private bank/commercial banking. This enabled us to get the best rates, great service from a business banker who we could call on short notice when something we wanted to buy came up to get pre-approval. With this individual within the bank understanding our business they were able to represent us to get us what we needed. When this individual was promoted their replacement delivered a similar benefit to us but over time we got to a point where it became beneficial to change strategy to multiple banks.
There is a risk that with cross collateralize that when you go to sell properties that are cross collateralized the bank will hold back proceeds from sale at their discretion meaning you may sell down assets with no cash coming to you as the bank uses the proceeds to lower their exposure. By understanding this is a risk, we've always managed that by agreeing up front with the bank before we list a property what they will accept as repayment. Where they've wanted too much cash we've simply refinanced that property to a different bank with no other securities held, then sold after a short while with no other properties at this bank we've received full nett proceeds.
Both one bank and multiple banks have their pro's and con's - the key is to understand them then to develop a strategy to minimise the risks whilst maximising the benefits of your chosen option.
We used a single bank for our early investing, we found it beneficial to be a big fish in a small pond by staying with residential business banking vs. going to private bank/commercial banking. This enabled us to get the best rates, great service from a business banker who we could call on short notice when something we wanted to buy came up to get pre-approval. With this individual within the bank understanding our business they were able to represent us to get us what we needed. When this individual was promoted their replacement delivered a similar benefit to us but over time we got to a point where it became beneficial to change strategy to multiple banks.
There is a risk that with cross collateralize that when you go to sell properties that are cross collateralized the bank will hold back proceeds from sale at their discretion meaning you may sell down assets with no cash coming to you as the bank uses the proceeds to lower their exposure. By understanding this is a risk, we've always managed that by agreeing up front with the bank before we list a property what they will accept as repayment. Where they've wanted too much cash we've simply refinanced that property to a different bank with no other securities held, then sold after a short while with no other properties at this bank we've received full nett proceeds.
Both one bank and multiple banks have their pro's and con's - the key is to understand them then to develop a strategy to minimise the risks whilst maximising the benefits of your chosen option.
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