How to Use a Lease Purchase Agreement to Buy Five Properties, One at a Time
If you’ve ever wanted to grow your real estate portfolio without relying on traditional bank financing for every deal, a lease option—also called a lease purchase agreement—can be a powerful creative finance strategy. But what if your goal is bigger than just one property? What if you want to buy five properties from the same seller, one at a time?
Here’s how you can structure and execute that type of deal while protecting both yourself and the seller.
📌 What Is a Lease Purchase Agreement?
A lease purchase agreement is a hybrid between a lease and a purchase contract.
- You lease the property for a set period (often 1–3 years).
- You have the option—or sometimes the obligation—to purchase the property at a pre-agreed price during or at the end of the lease term.
- A portion of your monthly lease payment may be credited toward the purchase price.
This arrangement allows you to control a property without having to qualify for a mortgage on day one.
✅ Step 1: Negotiate the Master Terms with the Seller
Since you’re looking to buy five properties from the same seller, start with an open conversation about your goals.
- Explain that you want to purchase all five properties over time, but you’d like to take them one at a time to manage financing and operations smoothly.
- Negotiate a framework deal:
- Agree on the purchase price for each property now (or agree on a formula).
- Set lease terms, such as monthly rent and how much of it will be credited toward the purchase.
- Agree on the timeframe for when you’ll exercise each purchase option.
Tip: Put all five addresses and general terms in a master letter of intent or a side agreement, then draft a separate lease purchase contract for each property as you go.
✅ Step 2: Structure Each Lease Purchase Agreement Individually
For each property:
- Lease Term: Often 12–36 months. Make sure it’s long enough to get financing, build equity, or improve the property.
- Option Fee: Pay the seller a non‑refundable option fee (e.g., 2–5% of the agreed price) that will apply to the purchase price later.
- Monthly Rent Credit: Negotiate that part of your monthly rent will reduce your purchase price (e.g., $200 per month).
- Purchase Price Locked In: Lock in today’s price so if the market goes up, you already benefit.
✅ Step 3: Execute the First Lease Purchase
Start with the first property. Sign the lease purchase agreement and begin making payments as agreed.
- Make improvements or find a tenant if you’re planning to sublease.
- Track your rent credits and option fee.
✅ Step 4: Build Performance and Move to Property #2
After you’ve proven you can handle property #1 (usually after 6–12 months of on-time payments), revisit the seller to execute the lease purchase on the second property.
- Because you already have a framework deal, the negotiations are easier.
- The seller feels more confident since you’ve performed on the first agreement.
✅ Step 5: Repeat for Properties #3, #4, and #5
As you grow, continue to follow the same process:
- Sign a new lease purchase agreement for each property.
- Continue building trust with the seller.
- Use cash flow or equity from earlier properties to help with option fees on later ones.
💡 Why This Strategy Works
- For the buyer: You can control and acquire multiple properties without qualifying for five mortgages at once.
- For the seller: They secure steady rental income and a committed buyer for each property.
- For both parties: It creates a step-by-step path rather than a complicated bulk sale.
🚀 Final Thoughts
A lease purchase strategy done right can be a win-win for everyone. By buying one property at a time under a master agreement, you reduce risk, build trust, and gradually expand your portfolio.
If you’re ready to try this, make sure to:
✔ Work with a real estate attorney to draft each lease purchase agreement.
✔ Be transparent with the seller about your plans and timelines.
✔ Perform on your first deal to open the door for the next four.
Creative finance is all about solving problems for sellers while growing your investment future—one property at a time!
REFERENCES:
Brassard, M. (2020). Creative real estate investing: How to buy with little or no money down. BiggerPockets Publishing.
Gallagher, S. (2023). Lease options and lease purchase agreements explained. BiggerPockets. https://www.biggerpockets.com/blog/lease-option-agreements
Johnson, W. (2021). The real estate investor’s handbook: Creative financing strategies for every market. Real Estate Investor Press.
Kimmons, J. (2022, August 29). Lease purchase agreement basics. The Balance. https://www.thebalancemoney.com/lease-purchase-agreement-basics-1798748
Miller, T. (2023). How to buy property using a lease option. Investopedia. https://www.investopedia.com/terms/l/leaseoption.asp