Affordable Vacation Homes: Buying a second home can be a complex and expensive endeavor, even for affluent individuals. Austin Allison, the entrepreneur who sold his real estate software company dotloop to Zillow in 2015, has found a way to simplify this process and make second home ownership more accessible. His startup, Pacaso, offers a unique co-ownership model that allows people to own a share of a luxury home without the traditional hassles of homebuying or managing a timeshare.
The Birth of Pacaso
Austin Allison and his wife became second homeowners about ten years ago when they purchased a home in Lake Tahoe. This experience opened their eyes to the benefits of owning a second home, such as gaining a new community and lifestyle. However, they also realized that most second homes remain vacant for about 90% of the time.
“One of the light bulbs that went off was the statistic that most second homes are only used about 10% of the time,” Allison shared. This insight led to the creation of Pacaso, a platform designed to connect prospective buyers with available second homes that would otherwise remain unused.
In just three years, Pacaso has secured significant funding, including an additional $125 million in September 2021, bringing its valuation to $1.5 billion.
How Pacaso Works
Pacaso’s model differs from traditional timeshares in several key ways. It operates on a co-ownership basis, meaning users own a fraction of the property rather than just time. This ownership structure allows for property appreciation, which is not typically seen in timeshares.
“With Pacaso, you own a home. With a timeshare, you’re buying time, typically in a hotel,” Allison explained. Owners who have sold their Pacaso shares have seen an average appreciation of about 10%.
Pacaso users can purchase between one-eighth to one-half of a home. The price for these shares ranges from $200,000 to $500,000, with the most expensive listing being a $2.5 million share for a home in Aspen.
Co-Owning with Strangers
One of the concerns with co-ownership is the potential awkwardness of sharing a home with strangers. Pacaso addresses this through its SmartStay scheduling tool, which ensures fair distribution of time among owners.
“For instance, if you own one-eighth of a luxury Pacaso home, SmartStay will ensure that you get one-eighth of peak season, one-eighth of non-peak season, and one-eighth of the holidays,” Allison said. This typically amounts to about five or six weeks a year, but owners can use more time if other owners are not utilizing their full allotment.
Additionally, Pacaso homes are equipped with large storage closets for owners to keep personal items, making it convenient and personal despite the shared ownership.
Benefits of Co-Ownership
The primary advantages of Pacaso’s co-ownership model are cost savings and ease of ownership.
“With a Pacaso home, you’re spending one-eighth of what you would spend to buy the whole home,” Allison noted. This means significant savings or the ability to afford a more luxurious property than one could independently.
Pacaso also simplifies the maintenance and management aspects of homeownership. “Owning a home is hard. Owning a second home is really hard. All the little details around maintenance, bill pay…it’s a lot of work,” Allison said. “With Pacaso, we handle all those details for you.”
The Future of Second Home Ownership
Pacaso’s innovative approach offers a glimpse into the future of second home ownership. As property prices and mortgage rates rise, co-ownership models like Pacaso’s provide a viable and attractive alternative for those looking to invest in luxury real estate without the traditional headaches and costs.
By addressing both the supply of underutilized homes and the demand for affordable luxury, Pacaso is redefining what it means to own a second home. This clever workaround not only makes second home ownership accessible to more people but also enhances the overall experience by eliminating many of the common pain points associated with it.
For high-net-worth individuals looking to enjoy the benefits of a second home without the usual hassles, Pacaso offers an elegant and sophisticated solution. This innovative model is poised to transform the landscape of luxury real estate, making second home ownership more accessible and enjoyable than ever before.
Also read: Luxury Vacation Home Buyers Investing Millions in Pickleball Courts and Secure Safe Rooms
