Purchase Lease Options (PLO)
A Purchase Lease Option (PLO) gives an investor the right to control and rent out a property now, with the exclusive option to buy it at a fixed price at a later date.
A Purchase Lease Option (PLO) is a highly creative 'no money down' strategy. It involves two separate legal agreements: a Lease Agreement (allowing the investor to control and manage the property, collecting rent and paying the owner's mortgage) and an Option Agreement (giving the investor the right, but not the obligation, to buy the property at an agreed price within a set timeframe, e.g., 5 years).
This strategy is typically used with highly motivated sellers—such as landlords facing negative equity or those desperate to walk away from void periods and maintenance issues.
The Profit Mechanism
The investor profits in two ways. First, they generate monthly cash flow by renting the property out (perhaps as an HMO or serviced accommodation) for more than the owner's mortgage. Second, if the property's market value rises above the fixed option price over the 5 years, the investor captures 100% of that capital growth.