4 Part Purchase Lease Option Series

Part 1: What is a Purchase Lease Option?

I recently did a poll on our Instagram stories about purchase lease options and even though many had heard of them, you wanted some more information about how they work. So I’ve put together a little series which will hopefully help!

A Purchase Lease Option (also known as a PLO) is a legal agreement that allows you to control a property, and generate income from it, with the right (but not the obligation) to buy it at a later date. The eventual price you pay, the monthly lease payment and the length of the agreement, are all agreed at the start.

So its 2 separate legal agreements with the owner that you complete at the same time:

??A lease or management agreement– you agree to pay a monthly rent to the owner which allows you to manage the property and rent it out to tenants (for a profit).

??Option Agreement – here you agree the price you will buy the property for (if you want to) and how long you have to buy it.

The 4 key things you need to agree for a PLO are:

1?? the monthly rent

2?? purchase price

3?? length of the agreement

4?? consideration – there must be some sort of up-front payment for the agreement to be

legally binding. This can be just ￡1...But remember you will incur legal fees and usually the property will need some work so it will cost more than ￡1!

PLOs are a fantastic strategy, in part 2 we will explore the types of owners who might be interested in this solution!