I think you make a fair point, @LaMancha Sims.
When you are working with a single lender, they are fully aware of your entire portfolio and may save the investor from becoming over-extended. I have seen this happen to one of my clients. He wanted to continue purchasing property with loans from us, but management noted how many vacant/under renovation projects he owned at the time and cautioned me to push pause considering the potential for being over extended. At first, my client scoffed at the idea, but went along with it since we were his preferred lender. A few months later, he came to us and shared that he was indeed overextended and had too many projects going at once. This was about 18 months ago, and with us nearly out of the hole and all projects renovated, rented and refinanced, he now thanks us for pushing pause when we did.
At the end of the day, it is good to have a couple dedicated lenders as mentioned by @Robin Simon. Each lender may specialize in different aspects (renovation loans verses rental loans) or simply help you know if your preferred lender is keeping pace with the overall market. That said, if you work with too many lenders, it could potentially cause an investor to overextend if the lenders they are working with do not qualify income, credit, ask for a schedule of REO, etc. (hard money/private lenders).
A good rule of thumb to prevent this is to ensure the investor keeps about 4-to-1 or 5-to-1 equity in each deal. If the investor is unable to keep that amount of equity per deal, plus have the cash reserves for expenses/improvements, they need to be aware of the risk and weigh the pros and cons of potentially becoming overextended should the market shift, unexpected problems arise, etc.
Happy Investing!
