Florida · SSDF Inc. · AFR-compliant
Stack the first. Carry the second.
One file, three seats. DSCR or hard money in first. Seller paper at or above AFR. Option A kicker on the way out. Cash-to-close is not cash-down. CLTV is not LTV.
Purchase price
$500,000
Cash-to-close
$14,650
LTV 70% · CLTV 100% — over senior cap · Kicker A dies on senior foreclosure
- Note #1 · first · DSCR / hard money
- $350,000
- Note #2 · second · seller carry
- $150,000
- Cash down vs check at closing
- $0
70.0% LTV · 8.50% · 30 yr amortizing
30.0% of price · 4.49% · 5 yr balloon
Zero down — buyer still writes $14,650 at closing
Constitution · rev 1 · not ready
$500,000 · 70% / 30% · investment / non-owner-occupied · AFR 4.49% unlocked · September 2026
- AFR floor met
- AFR not locked
- Below usury cap
- CLTV 100% over cap
- Senior DSCR
- Investment occupancy
- Zero down · check still due
This structure does not close as drawn
- CLTV 100.0% sits over this senior’s 80% cap. A 70/30 stack is 100% CLTV — most DSCR firsts will not close it as disclosed subordinate financing.
Raising the cap is only honest if a named senior actually publishes that CLTV. Most DSCR firsts do not.
Qualify the file
Writes into the live file. Lenders read the same answers.
Stack Method — first, seller second, Option A kicker
Shop DSCR first (620+ programs). Watch CLTV — a 70/30 stack is 100% CLTV and most firsts will not take a disclosed second at that number. Zero down is not a zero check. Cash-to-close still has stamps, title, points. Zero equity is only defensible behind a professional first that actually allows the CLTV. Price Note #2 at or above the term’s AFR bucket, lock the ruling into the file. Purchase Money Mortgage with title at closing. Intercreditor is a closing condition.
Run CLTV and cash-to-close on this desk, then generate the term sheet.
Seller profile — emphasis only
Does not add lease-purchase, subject-to, or wraps. Those stay attorney-required and off the menu.
Emphasize year-0 installment vs lump-sum. Recapture still hits this year. Hand their CPA Pub 537 and Form 6252 — do not argue tax.
Combined PITIA + second
$3,252.45
$39,029 / year
Note #1 P&I
$2,691.20
Note #1 PITIA
$2,691.20
Note #2
$561.25
Tax / ins monthly
$0
Tax and insurance are $0 in this file — PITIA equals P&I until you enter them.
Coverage — two DSCRs
Covers- Senior (NOI ÷ first PITIA, need 1.25x)
- 1.49x
- Combined (NOI ÷ PITIA + second, need 1.10x)
- 1.23x
- NOI −10% / −20% senior
- 1.34x / 1.19x
Effective NOI ≥ $3,364.00 / mo
Effective NOI ≥ $3,577.69 / mo
Stress on effective NOI, not a promise the rent holds
AFR floor on Note #2
At or above AFRA 5-year note sits in the mid-term AFR (over 3 and up to 9 years). Published 4.49% annual compounding as of September 2026 (Rev. Rul. 2026-17). Stated rate is 4.49%. This is the IRS table, not FRED. Not locked — a 45-day close can drift under the floor.
Equity kicker · Option A
$17,400
Default — % of net sale or refinance proceeds above a hurdle. 20% above a $550,000 hurdle (net-capex), illustrated at $650,000, uncapped. Dies on senior foreclosure. Characterization (interest vs participation) is counsel’s call. Hurdle cleared on this sale price.
Buyer check — not cash-down
$14,650
Gross costs $14,650. Down payment $0 is inside the gross. Credits and a gated roll-into-Note-#1 cut the check, not the CLTV.
- Cash down (equity)$0
- Deed documentary stamps$3,500
- Mortgage stamps — Note #1$1,225
- Mortgage stamps — Note #2$525
- Intangible tax — Note #1$700
- Intangible tax — Note #2$300
- Title insurance (est. owner + lender)$3,575
- Recording$250
- Appraisal / flood cert$650
- Survey$425
- Note #1 points (1.00%)$3,500
- Prepaid interest on Note #1$0
- Tax escrow deposit$0
- Insurance escrow deposit$0
Exit waterfall
- Gross sale / appraised$650,000
- Sale closing costs−$13,000
- Verified capex-$0
- Note #1 payoff (illust. remaining)−$334,216
- Note #2 payoff−$150,000
- Equity kicker−$17,400
- Buyer residual$119,600
List it vs. carry it
Same $500,000 price · seller's pocket
List with a realtor
$404,840
Illustrative net after commission, 1% close, and tax on the gain this year
- Gross$500,000
- 6.0% commission−$30,000
- Seller closing (illust. 1%)−$5,000
- Tax on $320,000 gain @ 18.8%−$60,160
- Income after cash-out$0 / month
Carry the second
$551,075
Cash at close + Note #2 face + 5 years of interest + illustrated kicker
- Cash at close (Note #1)$350,000
- Note #2 face (balloon)$150,000
- 5-yr interest$33,675
- Illustrated kicker$17,400
- Monthly check$561.25 / mo
Carry total is pre-tax on interest (ordinary) and on the kicker. Year-0 installment tax still includes Note #1 proceeds as cash received plus any §1250 recapture — see the tax table. Basis used here is $180,000.
How this file actually closes
A 70/30 DSCR first that never published 100% CLTV is a teaching default, not a closable overlay. Pick a lane. Silent seconds, 0% notes, and land contracts stay off the menu.
1. Size the first to a published cap
Stabilized rental. Buyer has some cash.
Note #1 at that shop’s max LTV and max CLTV. Note #2 is the rest. Bring cash until CLTV clears, then a concession and/or lender credit for stamps.
2. Seller is the bank
No institutional first. Seller will underwrite the buyer.
One recorded PMM at AFR+, balloon, servicing, tax/insurance impound. Two lawyers. The seller is the whole stack.
3. Private / hard-money first that publishes a second
DSCR said No to the disclosed second.
Gelt, Soviero, Bennett, Benworth, some local private. Price like hard money. Intercreditor before the deed. Exit is sale or refi into Lane 1.
10. Credits that zero the check
Lane 1 or 2 is already sized. CTC is the only hole left.
True seller concession (cash at the table falls; note does not grow) then a small lender credit. Unused concession dies. It is not down payment.
Same price · three stacks
70/30 at $0 down is 100% CLTV. 20% cash is how most DSCR firsts actually close a disclosed second. Not a recommendation — a picture of the overlay.
| Stack | LTV / CLTV | Check | Comb. DSCR | Closes? |
|---|---|---|---|---|
| This file | 70% / 100% | $14,650 | 1.23x | Dead as drawn |
| 60 / 40, $0 down | 60% / 100% | $14,150 | 1.31x | Dead as drawn |
| 70 first + 20% down | 70% / 80% | $114,100 | 1.39x | Under the cap |
Tax year — planning illustration
CPA confirms. Not a filing. Pub 537 / Form 6252.
| Item | Cash sale | Installment / carry |
|---|---|---|
| Year-0 cash to seller | $500,000 | $350,000 |
| Gross profit | $320,000 | $320,000 · GP 64.0% |
| §1250 recapture (year of sale) | $0 | $0 |
| Year-0 recognized (illust.) | $320,000 | $224,000 |
| Illust. year-0 tax | $60,160 | $42,112 |
| Deferred gain | $0 | $96,000 |
| Interest (ordinary, each year) | $0 | $6,735 / yr |
Note #1 proceeds are cash in year 0 — they are not deferred just because there is a second. Recapture is recognized in the year of sale even on a carry. If the seller later sells or gifts the note, installment treatment can accelerate. Servicer issues 1099-INT; 1099-S may issue at closing. §453A not flagged (deferred face under $5M on this sheet). IRS Pub 537: https://www.irs.gov/publications/p537 — Form 6252: https://www.irs.gov/forms-pubs/about-form-6252
Three exits · sensitivity
Sale
Illustrated $650,000 → kicker $17,400, buyer residual $119,600.
Refi at balloon
New loan $455,000 at 70% of $650,000. Pays Note #1 remaining $334,216. Cash-out after both notes $0. Seasoning is the first’s rule, not ours.
Note sale (year 2)
Discounted 18% → $123,000 to the seller. Not carrying to balloon. Extension language: 24 months if never more than 10 days late — language only, not a promise.
| Hold | Shock | Sale | Kicker | Residual |
|---|---|---|---|---|
| 3 yr | -10% | $585,000 | $4,660 | $68,640 |
| 3 yr | 0% | $650,000 | $17,400 | $119,600 |
| 3 yr | 10% | $715,000 | $30,140 | $170,560 |
| 5 yr | -10% | $585,000 | $4,660 | $68,640 |
| 5 yr | 0% | $650,000 | $17,400 | $119,600 |
| 5 yr | 10% | $715,000 | $30,140 | $170,560 |
| 7 yr | -10% | $585,000 | $4,660 | $68,640 |
| 7 yr | 0% | $650,000 | $17,400 | $119,600 |
| 7 yr | 10% | $715,000 | $30,140 | $170,560 |
Amortization through the balloon
Note #1 remaining at Note #2 balloon: $334,216
Note #1
- Y1int $29,648bal $347,354
- Y2int $29,415bal $344,474
- Y3int $29,160bal $341,340
- Y4int $28,883bal $337,929
- Y5int $28,582bal $334,216
Note #2
- Y1int $6,735bal $150,000
- Y2int $6,735bal $150,000
- Y3int $6,735bal $150,000
- Y4int $6,735bal $150,000
- Y5int $6,735bal $150,000
If the senior forecloses — educational
Florida judicial foreclosure is slow and expensive (often 12–36 months). Sale proceeds pay costs, then Note #1, then Note #2. The kicker dies. This is not a how-to. It is why underwriting, escrow, and a professional first exist — and why “I’ll just take the property back” is a line that loses the room.
Illustrated Note #2 at risk: $150,000 plus accrued interest.
Florida (generic) · clerk & appraiser
Pick a county to open clerk, official records, and property appraiser.
Do not invent an insurance premium. Florida OIR consumer resources: floir.com. Save Our Homes cap usually resets for the buyer.