It’s no secret the pandemic has shifted where and how we live, and hybrid living (read: splitting time between city and suburban living) has become the norm. Remote work since the onset of the pandemic has allowed people to work from wherever, whether from a ski hill or in a city apartment.
And while pandemic-era savings have allowed many to do both, Pacaso, a technology-enabled real estate marketplace that helps people buy and co-own second homes, sought out to create a more legitimate way for people to co-own luxury properties. Founded by dotloop founder Austin Allison and former Zillow CEO Spencer Rascoff, Pacaso purchases luxury homes and offers ⅛ to ½ ownership with managed LLC co-ownership, professional property management and a smart scheduling system. How it works is that co-owners purchase a single-family residence under an LLC, and the platform helps owners divides up responsibilities like management (operating costs, property management, maintenance, taxes and repairs); financing and billing; scheduling; furnishing; and more. There’s also a dedicated Home Manager in every region.
Co-owners, whether friends, families or strangers, own 100% of the home and Pacaso doesn’t retain any shares, though they help facilitate scheduling, financing and management. Allison, a second homeowner himself, was inspired to create this co-ownership platform as he found second homes are often highly underutilized.
“Most people with second homes own 100% of something they’re only going to use 10% of the time,” Allison tells Forbes. “Co-ownership is a common ownership structure, but it’s never really been possible with people you don’t know, and it’s also a lot of work to do it on your own.”
Pacaso has homes in 35 second home markets in the U.S., as well as cities in Spain, including Marbella, Ibiza and Madrid. Markets include several cities in Florida, California, Colorado, Hawaii, Idaho, Oregon, Arizona, South Carolina, Utah and Wyoming. It’s not uncommon for homes to cost upwards of $4 million, like this Greek resort-inspired home in Malibu for $15 million. After homes are purchased by Pacaso, they are furnished by the company’s in-house interior designer. Each ⅛ is then sold off, and people can buy multiple shares or just one.
“The main benefits for the consumer are accessibility, like lower cost, less hassle and less guilt,” Allison says. “It’s a lot more accessible to pay for 1/8 of a home and to pay 1/8 of the operating expenses than it is to pay for the whole thing. Most homes in our markets right now are, on average, $4 million. We’re empowering people to buy a $4 million home at a half-million price point. There are also lower operating expenses because you only pay for your fair share of taxes, insurance, utilities and more with the Pacaso model.”
He says that the model is different from timeshares in that people fully own the property and it transacts just like any other piece of real estate.
“With a resort timeshare, you’re buying time, but with Pacaso, you’re buying real estate,” he says. “Resort timeshares are basically hotels, so the supply is commoditized. Every Pacaso home is unique and individual.”
Allison argues that Pacaso is also helping housing’s sustainability problem and also helping to support local economies on a year-round basis.
“Empty second homes are bad for the environment; they’re wasteful and translate into a larger carbon footprint,” he says. “An empty second home means another home needs to be built to absorb demand. Empty homes are also bad for communities. Whereas with Pacaso-managed homes, the homes are utilized 90% of the time. All year long, not just the holidays and the peak seasons, owners are using these homes and supporting the local bars, restaurants and markets.”
However, the model hasn’t been without pushback from local communities, some of which argue that the homes that neighbor their properties are being turned into corporations. According to NPR, some neighbors dislike having a carousel of vacationers coming in and out of their neighborhoods throughout the year. Pacaso is still less than two years old, so it’s hard to measure both long-term impacts on the community and the general attitude towards this new concept of second home ownership.
Several of Pacaso’s properties are more remote, however, and don’t have any neighbors, such as homes in Wyoming. Many of the homes are true, private escapes. While Allison says that many friends purchase homes together, many don’t. It’s possible that you might never know who else co-owns the home, as many want to stay anonymous. And because two co-owners are never overlapping schedules, the home feels like your own.
“Our SmartStay algorithm ensures that the calendar is fairly distributed among the ownership group,” Allison says. “The back-end of the system ensures your scheduling blocks are fair and equitable.”
The company, founded in October 2020, is the fastest in American history to receive unicorn status of a billion-dollar valuation. In its full first year of 2021, the company generated nearly $300 million in revenue. This year, they plan to expand to more than 30 home destinations in the U.S. and Europe.