In-depth guides with real deal examples for the Morby Method, SubTo, seller finance, gap funding, BRRRR, DSCR loans, and exit strategies.
The Morby Method (also called the Stack Method) is a creative finance strategy that uses two separate transactions at closing to acquire a property with little to no money out of pocket. It combines a traditional DSCR loan with seller financing and transactional funding.
Here's how it works: A DSCR lender funds the 1st position loan, typically 75-80% of the purchase price. The buyer is required to bring a 20-25% down payment. A transactional lender temporarily provides this down payment by wiring the funds to escrow. At closing, the seller agrees to carry a note in 2nd position for the amount of the down payment. The transactional lender is then repaid the same day because the seller's note replaces the need for the buyer's cash.
The result is a property with two liens: a 1st lien (DSCR loan at 80% LTV) and a 2nd lien (seller-financed note for 20%). The buyer owns the property with minimal cash invested — typically just the transactional funding fees (1-3%) and closing costs. The seller gets their asking price, the DSCR lender has a standard 80% LTV loan, and the buyer controls a cash-flowing asset.
The key to making the Morby Method work is the DSCR ratio. The property's rental income must cover the combined debt service (1st + 2nd lien payments). Many deals use a 'silent second' where the seller financing has 0% interest and no payments for a period, making the DSCR calculation based only on the 1st position loan.
Find a motivated seller
Look for sellers willing to carry a 2nd position note (20-25% of the purchase price). Free-and-clear sellers or those with low loan balances are ideal.
Get the DSCR loan pre-approved
Secure a DSCR lender willing to fund 75-80% LTV. The property's rent must produce a DSCR of 1.0x or higher.
Line up transactional funding
A transactional lender agrees to wire the down payment to escrow. Their fee is typically 1-3% of the funded amount.
Close both transactions simultaneously
At the closing table: DSCR lender funds 80%, transactional lender funds 20%, seller receives full price. Seller's 2nd position note is recorded.
Transactional lender is repaid same day
The seller's note replaces the buyer's cash obligation. The TF gets their principal + fees back immediately.
Hold and cash flow
You now own the property with two liens. Collect rent, pay both notes, and pocket the difference.
3BR/2BA single-family in Tampa, FL. Seller owns free and clear, agrees to carry 20% as a silent second (0% interest, no payments for 5 years).
Buyer controls a $300K rental producing $522/mo cash flow with only $10,815 out of pocket. The silent second means DSCR is calculated on the 1st lien only (1.31x — strong).
Duplex in Charlotte, NC. Seller has a $100K mortgage. Agrees to carry $85K in 2nd position at 5% interest, 30-year amortization, 5-year balloon.
Tight but viable. The 5% seller note eats into cash flow. Plan: hold for 2 years, raise rents $100/unit, then refi at 75% LTV to pay off the seller note and improve cash flow.
Use our calculators to analyze a Morby Method, SubTo, Gap Funding, or BRRRR deal with real numbers — then share it with your team.