First Deal Financing Advice

[Jerrod Plotts]

I have been shopping lenders for my first deal. I wanted to ask advice on products that investors have used on their first deal. I’m currently between using a small community bank commercial product that has a 20 year amortization cap; I bank personally with them and have a great relationship. In addition, I am looking at conventional loan and DSCR products. With the current rates and fees, it is difficult to know which product fits my underwriting strategy best. Also, I am looking for capital partners which means conventional loans would be out of the picture in a partnership or LLC structure. Just looking for general advice and words of wisdom from experienced investors.

[James Jones]

You’re asking the right question. Most first deals aren’t won on rate. They’re won on flexibility and survivability.

A few thoughts:

1. Community bank commercial product (20-year amortization)

Pros:

• Relationship matters

• Often more flexible underwriting

• Easier conversations if things go sideways

• Cleaner for partnerships and LLC structures

Cons:

• Shorter amortization = higher payment

• Sometimes balloons

• Prepayment penalties can matter

For a first deal, having a real human you can call at the bank is underrated.

2. Conventional loan

Cheapest money. Longest amortization.

But:

• Harder with partners

• More rigid guidelines

• Personal DTI matters

If this is a pure personal buy-and-hold and you qualify easily, conventional is hard to beat.

3. DSCR loan

Great for scaling.

Great for LLC ownership.

No personal DTI focus.

But:

• Higher rates

• Higher fees

• You must underwrite conservatively

For a first deal, DSCR makes sense if you're building a portfolio structure from day one.

Now the bigger question:

What’s your 3–5 year plan?

If you’re:

• Buying 1–2 properties and holding → conventional may win.

• Building inside an LLC with partners → community bank or DSCR.

• Planning to scale aggressively → think about repeatability now.

Also — don’t over-optimize the rate.

First deal rule:

Prioritize structure > flexibility > survivability > then rate.

Make sure:

• The payment works with conservative rents

• You have reserves

• The exit is clear

The best product is the one that fits your long-term model, not just this deal.