Co-ownership of a second home is the latest twist on ‘vacation’ home-sharing.
Pacaso offers a fully managed co-ownership model that makes owning a second home affordable and carefree.
Founded by former Zillow Group CEO Spencer Rascoff and dotloop founder Austin Allison, the company launched Thursday with four homes. It plans to be in 25 U.S. markets, including Austin and Scottsdale, in a year. Pacaso will focus primarily on houses within a two-hour drive from a buyer’s main residence, usually an urban location.
Pasco will make money from “charging a markup on the individual ownership shares of about 10% to 15% and by collecting an annual maintenance fee equal to 1% of the purchase price,” according to The Wall Street Journal.
Pasaco is similar to traditional timeshares in that home buyers will have the right to use the house a certain number of weeks a year but with one key difference – they own the underlying asset.
Fractional ownership is not necessarily cheap, but it makes homeownership more accessible in high price areas. A 5-bedroom house in Napa listed on the Pacaso website is priced at $725,000 for 1/8 ownership.
How does it work?
Home buyers find a home on the market they are interested in partially owning, or browse through Pacaso listings. If Pacaso views a home as a good investment, it buys the house and sells between 12.5% and 50% to the new owner; then the company tries to sell the remaining shares. Pacaso also manages the homes.
The company enables buyers to finance as much as 50% of their share through a program with First Republic Bank. Unlike most timeshares, Pacaso’s buyers actually obtain partial ownership in the property.The Wall Street Journal
Since it is a shared property, there will be some constraints regarding the use of the house, which is tied to the percentage of ownerships or number of shares owned, and scheduling.
Also, you can sell to Pacaso an ownership interest or have them help facilitate co-ownership for your second home if you don’t use it much and want to reduce operating costs.
Pacaso is banking that its carefree second home ownership model will appeal to those who “want to keep their urban address but want the option of escaping from time to time with a second house.”
photo credit: pacaso