Morby Method Consulting: How We Structure, Fund and Close the Deal

How a Morby Method deal is structured

In general terms, the Morby Method, also called the Stack Method, is a creative-finance approach to a purchase in which more than one source of financing is combined, so the investor does not rely on a single traditional loan to do everything. The pieces have to be sequenced correctly, disclosed to every party and supported by real numbers.

Every deal is different, but the same building blocks come up again and again:

• The property and the purchase contract. The price, terms and timeline set the frame.
• The primary financing. Its rules decide what else is allowed in the deal.
• Seller financing. In some deals the seller carries part of the price, which must be permitted by the primary lender and properly documented.
• Short-term or gap capital. Some deals need temporary funds for a defined need.
• Liquidity and guarantor support. Some investors bring in a partner who provides liquidity and signs on the loan.
• The exit. Hold as a rental, refinance or sell, whichever is realistic for the property.

Order matters. If a seller agrees to terms the primary lender will not allow, the deal has to be rebuilt. If a deposit is due before funding is lined up, the investor is exposed. Putting the whole picture on one page first is far cheaper than fixing it after a contract is signed.

Finding Morby Method deals and negotiating with sellers

A good deal needs a property that can support the financing and a seller whose goals can be met by flexible terms. Start with a clear buy box: property type, location, the condition you are willing to take on and the exit you intend. Before pursuing a property, ask whether the seller can sell cleanly, whether the seller is open to carrying part of the price, whether the primary lender would allow it, and whether the title and lien picture is clear.

We do not claim that matching inventory always exists or that any specific property is available. A screening conversation is meant to show early whether a deal can reasonably work.

Negotiation works best when it is honest and focused on what the seller really needs. Some sellers want speed, some want a steady payment over time, and some want to avoid hassle. Terms commonly discussed include the price, whether the seller carries a note, payment timing and maturity, security and lien priority, default and payoff mechanics, and the closing timeline. Every term has to be disclosed to the lender and the title company and written into documents that can be carried out. A handshake term that is not documented is a risk to everyone.

The Morby Method liquidity partner and guarantor

Lenders look at more than the property. They look at the borrower’s liquidity, reserves, credit and experience. A strong deal can still stall if the borrower alone does not meet those requirements. A liquidity partner can help by bringing financial strength to the file, often by providing liquidity and signing on the loan as a guarantor.

A guarantor agrees to be responsible for the loan if the borrower does not repay it. That is a serious legal and financial commitment, so anyone considering it should have the full documents in front of them and speak with their own legal and tax advisers first.

The investor and partner need a clear written understanding of their roles: who contributes what, who signs what, what each party’s exposure is, and how each exits the arrangement. A guarantor may strengthen a file, but the lender still reviews the borrower, the guarantor, the property, title and documents. Approval is never promised.

Transaction coordinators and the transactional lender

A creative-finance deal has many moving parts: the contract, the primary lender, any seller financing, the title company, the investor and sometimes a partner. A transaction coordinator keeps the documents, deadlines and communication moving between all of them. Good coordination does not change the economics, but it can prevent avoidable delays from missed deadlines and missing documents. It is not a guarantee that documents, funds, approvals or closing dates will be available.

A transactional lender provides very short-term capital for a defined transaction need, such as one side of a double close or an earnest-money deposit. It is evaluated deal by deal. It is not a substitute for reserves, and it does not guarantee a permanent loan to replace it. The repayment source, timing, cost and settlement mechanics must be known and acceptable to the parties involved.

Gap funding for Morby Method deals

Some deals have a gap between what the primary financing covers and what the investor needs to bring. Gap funding is supplemental capital for an identified project need. It is different from transactional funding, and Levine Capital’s guidance says it is offered only in conjunction with its own Fix & Flip loans. See our gap funding page for details.

Our gap funding resources page explains the external options investors sometimes consider, such as gap funding, 0% credit stacking, a HELOC and business lines of credit. These are categories to understand, not quotes or commitments. They are arranged through GapFunded, an external funding-coordination provider that is not a bank or direct lender, and third-party lenders decide eligibility, underwriting and final terms. Borrowed funds can carry repayment and personal-guarantee obligations even when unsecured. A senior lender must approve any borrowed down payment or credit stacking where required, and sources of funds should never be hidden. Levine Capital may earn a referral commission at no additional cost to you.

Documents and compliance done the correct way

In a creative-finance deal, the documents are the deal. A verbal agreement means little unless it is written into a contract and instruments that can be carried out. The loan documents, any seller note, security instruments and closing paperwork must agree with one another. Common problems include a seller note that conflicts with the primary loan, a party named incorrectly, or a term described one way in the contract and another at closing.

Disclosure is the foundation. Every lien, payment obligation, partner and source of funds should be disclosed to the parties who need to know, including the primary lender, the title or settlement company and any guarantor. There can be no hidden debt and no concealment of where a required contribution comes from. Our lending and deal support guide explains why a complete, consistent capital stack matters.

A simple habit helps: keep every document in one place, check that names, dates, amounts and terms match, confirm that every party who must approve has approved, and have the right professional review the part within their scope. We organize the financing side and help coordinate, but we do not replace independent legal, tax, accounting or title advice.

Making the cash flow and terms work

Positive cash flow means the income a property produces is more than the costs of owning it, including every loan payment. With more than one loan, such as a primary loan and a seller note, every obligation has to be counted together. A deal that only works if one obligation is ignored does not work.

A review starts with verified inputs: supportable rent rather than a hopeful number, every loan payment, taxes, insurance, maintenance, management, vacancy, repairs, closing and holding costs, and reserves.

Terms matter as much as price. The payment structure, maturity date, default provisions and payoff mechanics change what is owed and when. A seller note that comes due before the exit is ready can turn a good deal into a problem. So the question is not only whether the deal cash flows today, but whether it still works when each obligation comes due. The exit, whether a rental hold, a refinance or a sale, is never assured, so a careful plan covers what happens if it takes longer than expected. For a rental exit, a DSCR review compares qualifying rental cash flow against required debt service, though it is only one part of a lender’s review. No calculator result is a quote, an approval or a prediction of return.

Talk through your deal

If you have a deal in mind, request a quick quote to start a scenario review. If you want to talk through structure first, book a strategy call. To understand funding options for a gap, read our gap funding resources. None of these steps is an approval or commitment to lend, and financing, partner participation and final terms depend on the individual transaction.