Make the stack make sense before you make the offer.
Seller notes, a first-position loan, timing and closing costs all have to work together. Explore the deal math with MorbyMethod.ai, then bring the real scenario to Levine Capital for review.
What is a Morby Method deal?
At its simplest, it is a proposed acquisition that combines a first-position loan with seller-carried financing. Some deals also need temporary, fully disclosed capital to bridge closing timing. The point is to build a workable, documented structure—not to skip underwriting or hide the seller note.
The exact first lien, seller note, lien priority, down payment, closing instructions and exit plan all depend on the property and the capital provider. A seller-carried second is not automatically allowed by every lender, and “little or no cash out of pocket” is a possible scenario, not a promise. Reserves, fees, transfer taxes, repairs or a valuation shortfall may still require cash.
The first lien
A proposed DSCR, bridge or other investment-property loan is sized for the actual property, borrower and program—not simply for the purchase price.
The seller note
The seller may agree to carry a documented junior obligation. Payment terms, lien position and lender permission must be established before closing.
The closing gap
Temporary transaction capital may be considered when the gap, repayment and settlement mechanics are disclosed and acceptable to all required parties.
The math is simple. The approval is not.
Here is an illustrative capital stack, not a quote or a representation that a particular property will qualify. The transaction still needs enough value, cash flow, reserves and acceptable documentation.
A $300,000 investment-property purchase
This excludes closing costs, fees, reserves, repairs, valuation adjustments and any temporary-capital cost. The first lender and closing team must accept the seller-note and funding mechanics; no 80% LTV, seller financing or cash requirement is guaranteed.
Use the deal hub to organize the moving pieces.
MorbyMethod.ai is a live Levine Capital-connected educational and deal-analysis resource. Its tools help you put numbers and questions in one place; its calculator output is not a loan approval, an appraisal or legal closing advice.
Pressure-test the numbers
Use the deal calculator to examine first-lien sizing, proposed seller financing, rent and potential exit assumptions.
Learn the structure
Read the education guides before discussing seller-note timing, the capital stack or a subject-to scenario with the right professionals.
Bring us the facts
Send the scenario through Levine Capital’s Quick Quote for an individualized financing conversation.
Also exploring the Stack Method?
StackMethod.ai offers a related calculator and education path. Use either tool to organize a proposal; the final capital structure is reviewed deal by deal.
How Levine Capital looks at a creative-finance deal
Start with the asset
Property type, purchase price, value, condition, rent, occupancy, location and any rehab plan.
Show the sponsor
Experience, credit, liquidity, reserves, entity structure and the realistic timeline to closing.
Disclose the stack
First lien, seller note, existing debt, temporary gap, payment obligations and proposed lien priority.
Test the plan
Rental cash flow, sale or refinance assumptions, holding costs and the downside if timing slips.
Some scenarios may fit long-term rental financing; others may call for a Fix & Flip Bridge or another permitted structure. No single loan product or lender rule applies to every stack.
Before committing to non-refundable deposits, ask whether the seller note survives title and first-lien review and whether settlement counsel needs changes to payment timing or subordination language.
Four questions to answer before the closing calendar fills up
The headline capital stack is only part of the transaction. The best early review identifies the constraints that would otherwise surface days before settlement.
Is the seller note actually permitted?
Do not assume a seller-carried second can replace the required buyer contribution. Ask whether the proposed first-lien program accepts it, how it must be subordinated, whether payments count in coverage, and which documents the lender and title team need. A seller who is open to terms is a starting point, not final approval.
Who funds the gap, and when are they repaid?
A temporary advance cannot be treated as invisible cash. Identify its source, cost, timing and payoff path. Confirm that the first lender, seller, settlement professional and other required parties see the same fully disclosed closing flow. If the mechanics do not reconcile on the settlement statement, the structure may have to change.
Does the property support the whole stack?
Rental income may cover the first lien yet leave too little room for the seller note, taxes, insurance, maintenance, vacancy and reserves. Compare realistic monthly obligations and stress a weaker rent or delayed lease-up. A calculator can expose assumptions, but verified property income and the lender’s program rules decide what is financeable.
What happens if the exit takes longer?
Short maturities, balloon payments and refinance assumptions deserve a second look. If the plan relies on a later DSCR refinance or sale, model transaction costs, seasoning or occupancy requirements where applicable, and the cash needed if values or rates move unfavorably. A viable entry is not enough without a viable hold and exit.
Common questions about seller notes and DSCR-first deals
Can a seller note always cover the down payment?
No. Whether seller financing can be used, how it is documented, and how it affects the buyer’s required funds depend on the specific first-lien program and underwriter. The seller’s willingness to carry a note does not override lender restrictions, appraisal findings, closing costs or reserve requirements.
Is temporary transaction funding automatically repaid at closing?
No. Timing must be planned and disclosed before anyone relies on it. The funding source, settlement professional and first lender must accept the exact use and repayment mechanics. If the proposed arrangement is not permitted or the seller’s note cannot be documented as expected, another structure or additional buyer cash may be required.
Is this the same thing as buying a property subject to its existing mortgage?
No. A seller-carried note behind a new first lien and a subject-to purchase involving existing debt are different transactions. A subject-to proposal can introduce due-on-sale, title, servicing, insurance and seller-liability questions. Bring any existing mortgage and seller expectations to the review and obtain independent legal and tax advice.
Can a DSCR loan work for every property?
No. DSCR and other rental programs vary by property type, unit count, location, condition, occupancy, cash flow, borrower profile and funding source. A property that does not fit one rental program might be evaluated under a different bridge or investment-property option, but there is no universal approval rule.
What is the best first step if I have only an address and a seller conversation?
Start with what you can verify: the address, price, current debt, seller’s desired payment terms, occupancy, likely rent, property condition and your intended exit. Use a calculator for a preliminary scenario, label unknowns clearly, then submit the opportunity to Levine Capital. A real financing review may reveal that the original stack needs to be revised.
The details that make a deal review useful
You do not need a perfect package. Tell us what is known and identify what still needs confirmation.
- Property address, type and contract or target purchase price
- Estimated value, condition, rehab budget and supporting comps
- Current or projected rent, occupancy and other income
- Seller-financing amount, rate, payment, term and lien expectations
- Existing mortgage, payoff or subject-to terms, if any
- Borrower entity, experience, liquidity and available reserves
- Closing timeline, requested first lien and any transaction gap
- Exit strategy and any title, tax or legal questions already identified
Important: Seller financing, subject-to and temporary transaction capital involve legal, title and lender-consent questions. Share the complete proposal with the first lender, settlement professionals and your independent legal/tax advisers. Do not assume an existing mortgage can be transferred or left in place without consequences.
Adam Levine participates in creative-finance education communities including Pace Morby’s Owners Club. Levine Capital and MorbyMethod.ai are independently operated and do not claim an official partnership, sponsorship or endorsement by Pace Morby, SubTo, Gator or Owners Club.
Bring us the deal, not just the buzzwords.
Run your initial numbers, then share the real property and seller terms. We will discuss the available paths and what would need to be verified before any financing decision.
Educational information only; not legal, tax or investment advice. Illustrations are simplified and are not an offer, approval or commitment to lend. All rates, leverage, seller-note permissions, capital availability, costs, timing and eligibility depend on the property, borrower, funding source, full underwriting, verification, title/closing requirements and final loan documents.
