The Property Unleashed Podcast

No Deposit? No Problem! The Magic of Purchase Lease Options

• Mark Fitzgerald • Episode 341

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We explore the world of property investment strategies focusing on Purchase Lease Options (PLOs), Lease Options, and Purchase Options as powerful tools for controlling property without immediate ownership. Breaking down each strategy's components, benefits, and ideal applications, we demonstrate how these creative acquisition methods can help both investors and tenant buyers achieve their property goals.

• Purchase Lease Options (PLOs) combine three elements: agreeing to purchase at a set price, leasing the property monthly, and having the option to buy at term end
• PLOs allow investors to control properties without needing immediate deposits or solicitor fees
• Particularly effective with HMOs and serviced accommodation where you can generate income before purchase
• Lease Options typically work with tenant buyers who want to eventually own their homes
• Purchase Options are shorter-term agreements useful for deal sourcers locking out properties for investors
• All agreements require proper legal setup with solicitors representing both parties
• Best approached as specific solutions rather than one-size-fits-all strategies
• Most successful when building trust and creating win-win scenarios for all parties

For ongoing support and in-depth training on these property investing strategies, check out our Education to Action community where you can access live coaching sessions and comprehensive property investing blueprints. Subscribe, share, and keep investing with skill, knowledge, and action.


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Speaker 1:

Purchase lease options explained. There's purchase lease options, there's purchase options and there's lease options, and in this video and in this episode, I want to explain to you exactly what each of those are, because they are different. So a lot of people at the moment are out there. They're looking for purchase lease options there's some deal sources that are getting stuck in as well, and they're looking more for purchase options and, of course, there are lease options that can be done as well, and this really came over from the United States. So in this episode, I'm going to explain to you what each and every one of those actually is. So let's start with a term that a lot of people know, which is purchase lease options. Now, if you're unfamiliar with what a purchase lease option, aka a PLO, is, this is when you actually go to buy a property off the owner, but you don't buy it right here, right now. You buy it sometime in the future. So, if we break it down quite simply, a purchase the property, so you agree a price to buy the property. You lease the property over the term that you agree. Now. That could be 12 months, that could be three years, that could be five years, it could be seven years. It could be whatever you've agreed, but in that time you will pay a lease fee, a bit like a rent, each and every month for having exclusivity over the property. And the option part is when you actually get to the end of the agreement where you're going to buy the property, you can assign it. I mean, you can sell the opportunity to another investor or let somebody else buy the property, or, of course, the best way to do it is to go through it and buy it for yourself. Now you have the option to buy it, not the obligation. You could hand the keys back to the owner and you could walk away. But we never want to get into a PLO ever thinking about giving the keys back, because that's just bad business. And as professional property investors which we are and if you follow me on my podcast or this YouTube channel then you are definitely on your way to becoming a PLO professional property investor.

Speaker 1:

So a purchase lease option, as I say, is when you agree a price to buy the property, you set up what you're going to be paying on a monthly fee and you have the option, not the obligation, to buy the property at the end of the term. This is really, really good. If maybe you've got a few things going on, maybe you haven't got the deposit money to buy a property, you can't afford the 25% deposit, you cannot afford the solicitor fees and everything. This can give you the opportunity to control properties in an amount of time and then buy them later on. And it's great because what you can do is, if you get the right properties in the right areas ie you're using strategies like HMOs or serviced accommodation you can actually then run those properties. You look after the property as if it's your own. So you will take on paying the bills. You will also take on basically looking after the property as if you had bought the property and that's one of the benefits for the owner of the property and at the end of the term, you buy the property for the agreed price. Now the agreed price might be market value now. Now there will be a lot of reasons that people think these do not work. They do work, but they just don't work with everybody. So you do have to build up the know, like and trust. You also have to get to know the areas, the properties that you're wanting to do up the know, like and trust. You also have to get to know the areas, the properties that you're wanting to do this with, because you need to be able to make money from this. You want to make it a win-win for all parties.

Speaker 1:

So let's just go into now lease options, because you'll probably have heard of a purchase lease option. A lease option, a purchase option but a lot of people get confused with exactly what everything is. A lease option, a lease option, a purchase option but a lot of people get confused with exactly what everything is. A lease option is when you agree to lease the property, you have a lockout to buy the property at the end of the lease, and this is more what people use for tenant buyers. So a tenant buyer maybe hasn't agreed the price right now. They've just agreed that they want to buy the property in the future and that could be at whatever the market value is at the end of the term. It's better to do a PLO because obviously you're locking that price in now, so everybody knows what you're going to be getting.

Speaker 1:

You might or might not have heard of tenant buyers. A lease option is great to use with a tenant buyer who's going to move into the property. They're going to treat the property as if it's their own. They'll take on all the costs and everything and then at the end of a set amount of time, they have then the option to buy the property. Okay, so it's great for people that are struggling to get onto the property ladder. Maybe they're sick of renting, they want to actually build up deposit, they actually want to have security in where they're living and, of course, a lease option can work very well. This is very, very popular in America and is something that's sort of trickling over here at the same time as well. But you get a lot of lease options done in America and their market and, predominantly, a lot of the creative strategies that we now use in the UK market have come from the United States, have come from the different ways that they do their deals. So let's just touch on now what a purchase option is. Now you'll realize that we've missed the lease, so normally a purchase option is done over a shorter amount of time.

Speaker 1:

Now, if you're interested in deal sourcing where you're finding deals for investors and, of course, selling them on and helping people sell their properties and things then a purchase option is a brilliant way to lock out an agreement so that nobody else can buy that property apart from your investors. And what is it? Well, obviously you've agreed the purchase price, ie the purchase of it, and of course, the option at the end is to sell it or assign it to somebody else to buy that property. So a purchase option is what you would fundamentally or could could not always, but you could look to use when you're deal sourcing to lock out agreement. It's actually, as a deal sourcer, easier to use a knockout agreement with the owner of the property than it is a purchase option, because there are fees that need to be paid. Now, when you do a purchase lease option with a homeowner or anybody like that, you will need solicitors property solicitors to be able to help you with these agreements, and both parties will need their own solicitors. And, of course, you'll also have to agree, when you do a purchase lease option, what your upfront purchase or option fee should I say is going to be. Now, that can be anything as little as a pound. When I've done purchase lease options myself, I've normally used the first month's lease fee, which is the monthly rent I'm going to pay the owner of the property, as the first fee itself.

Speaker 1:

As I say, this is a great tool to be using and you can use it to acquire property. You can use it to upgrade where you're actually living at the moment. So if you are looking at moving into a better area, a bigger house, your circumstances have changed. You can use this Property. Education to Action, which is my community, where we teach you how to use purchase lease options, purchase options, lease options and a whole lot more. So if you are interested and you want to learn more about purchase lease options and how you can use them as a tool in your property investing toolkit, which we should all have, then do check out there'll be a link below Education to Action, because we have the training in there. Do check out there'll be a link below Education to Action because we have the training in there and you can get started now. For as little as a pound, you can start learning all about purchase lease options.

Speaker 1:

But, as you probably can realize, this is a great tool to be using. I keep calling it a tool because I think if you go out there and you try and do every deal as a purchase lease option, you'll struggle because it's something that's got to fit into chatting to the owner, getting up the know like and trust with them being able to realistically understand their circumstances. Most people that are looking to sell a property right here, right now just want top value and they want to sell it and they want to clear off. They want the money. But there are pockets of people who will be struggling, who will be finding it very difficult to sell their properties at the moment, and that's where you can come in and you can see that a PLO will really fit their circumstances. Remember, in this day and age, now we want to be the property professional that can get out there and can help people.

Speaker 1:

This also works really, really well with the strategy rent to rent, which is a strategy where you take on the owner's property, you pay them a guaranteed rent each and every month and you manage and look after the property until the end of your contract agreement, which could be three, could could be five years. Works very, very well with that as well, because if you have a rent to rent and you think to yourself, do you know what I'd really like to own this property? Speaking to the owners, who you've already built up that rapport with, can work very, very well, and two of my purchase lease options have come through landlords that I'm already doing rent torent deals with on their HMOs. It works well on HMOs. It works well on Airbnb serviced accommodation as well. So I hope this episode's helped you.

Speaker 1:

If you need any help and support or you'd like to check out my property investing community, where we can help you on an ongoing basis with our live coaching sessions each and every week and our property investing trainings, which go so in depth that you will really have all the tools at your disposal to follow a proven blueprint to success, check us out at the link below. If you're interested in that, subscribe, share and I'll see you in the next episode very soon. You take care, keep investing with skill, keep investing with knowledge and keep investing with action. It's all about taking those actions and I look forward to seeing your results. See you soon. Bye for now.