PLO — Purchase Lease Option

A purchase lease option is a legal arrangement in which the property owner grants you the right (but not the obligation) to buy the property at a fixed price within a fixed term, while you simultaneously rent it from them and may sublet to a tenant.

When it makes sense

When a vendor has a target sale price the open market won't currently pay, but is content to wait for the value to grow into that price. The investor pays the owner monthly rent that covers the owner's mortgage, retains any rental surplus, and locks in the future purchase price.

Key risks

The owner's mortgage lender may not permit the arrangement. The property may depreciate, leaving the option out of the money. The investor depends on the owner's solvency and good faith for the option term.

Documentation

Always with a solicitor experienced in option agreements. Always with the lender's knowledge.

Where Elaman packs help

PLO-flagged packs include the vendor motivation that makes the strategy viable, the proposed option price, the proposed rent, and a worked example of cash flow during the option period.