Purchase Lease Options, or PLOs, are among my preferred strategies. They enable you to generate cash flow and equity growth without owning the property. By renting the property for a set period, you gain the right, though not the obligation, to purchase it at a pre-agreed price. This potent approach is often misunderstood when it comes to locating PLO opportunities. Here are three strategies to guide you in finding Purchase Lease Options.
First Approach to Discovering Purchase Lease Options
The initial method for finding Purchase Lease Options is straightforward. Utilize online platforms or engage with local estate agents or letting agents. Seek properties listed as both “For Sale” and “For Rent,” often denoted by the corresponding signage outside the property. The owners of such properties are essentially expressing a willingness to sell while being open to renting in the interim. This perfectly aligns with the concept of a Purchase Lease Option, where you rent the property for a specified duration and gain the Right to Buy. Approach these property owners through the Letting Agents or Estate Agents to explore potential collaboration opportunities.
Second Approach: Seeking Weary or Retiring Landlords
Another effective method for discovering Purchase Lease Options involves targeting landlords, specifically those who are fatigued or approaching retirement. To identify these landlords, search for property owners who advertise their properties for rent. Often, these landlords handle property management themselves, leading them to advertise the properties for rent. In certain cases, they might own a House in Multiple Occupation (HMO) and advertise individual rooms on platforms like SpareRoom.co.uk or Gumtree.com.
Once you spot such landlords online, initiate contact by sending a courteous text message or email expressing interest in their property. Mention that their property looks appealing and inquire if they would be interested in a guaranteed rental income for a period of 3 to 5 years. This approach is known as a Rent to Rent deal.
After establishing a conversation, proceed to ask the second question: “Would you be open to selling the property to me within a three to five year timeframe?” If they express willingness to do so, it essentially becomes an Option agreement, where they agree to rent the property for a specific period, granting you the right to purchase it. The next step is to negotiate the terms of the Purchase Lease Option.
Landlords who handle their own advertising might be struggling with property management issues, such as troublesome tenants or periods of vacancy. Thus, your offer of guaranteed rent can be highly enticing to them. Additionally, some landlords might reside far from the property, making remote management a hassle. Others might be working with inexperienced Letting Agents and wish to rid themselves of the associated burdens.
Third Approach is Gathering Information from Land Registry
In certain instances, you might obtain the owner’s details from the councils, but that’s not always the case. If needed, access Land Registry once again to acquire the necessary information. Subsequently, send them a letter with a similar inquiry: “Would you consider renting your property for an extended period, selling it, or perhaps a combination of both?”
Currently, many landlords are growing weary of the ever-changing legislation, particularly the impact of Section 24. Higher-rate taxpaying landlords face increased taxation if they own properties in their own name. These factors are prompting landlords to contemplate early retirement, leading to a surge in available landlord properties in the market. This presents an excellent opportunity to engage in such transactions at this time.
MORE ABOUT LEASE OPTIONS…