The dream of owning a second home is highly aspirational, but for many, stalled by financial burdens, upkeep, and other logistical challenges. Those who have navigated it with success will attest to how owning a vacation home is a transformative experience. A way to distance from the day-to-day. A way to capture a different state of mind. Companies like Pacaso have caught this energy and have attracted thousands to consider the co-ownership model, and specifically, the concept of luxury co-ownership. "We didn't invent property co-ownership," acknowledged Austin Allison, CEO and cofounder of Pacaso as he spoke with me about current real estate trends and the company's expansive consumer research. "It's just that DIY co-ownership is complicated and logistically hard. We focus on offering homebuyers a very luxurious experience while also allowing them to only buy the portion they need, which is good for affordability, and good for society."
For generations, consumers have been getting creative with ways to invest in vacation homes, oftentimes sharing costs and responsibilities with a small group of friends and family members to make joint ownership work. Despite lofty commitments and major investments, the majority of vacation homes are vacant 10-11 months of the year. Recognizing the potential in what could be good for communities as a whole, Allison and his team have re-evaluated the concept of co-ownership and have found a way that makes it easier for more consumers to buy and own a second residence.
Understanding Luxury Co-Ownership: A Modern Approach to Second Home Investment
No, joint property ownership isn’t a new concept, but Pacaso has redefined it in a way that makes luxury second home ownership more accessible and hassle-free. The company offers a streamlined, professionally managed co-ownership experience that simplifies logistics and takes the stress out of the homebuying and homeownership process.
In Pacaso's model, buyers purchase a share of a pre-furnished luxury property, typically ranging from one-eighth to one-half of the home. This entitles them to a proportional amount of time at the property each year, with all financial responsibilities, including maintenance costs, taxes, and homeowner's insurance, shared among co-owners. Pacaso’s proprietary scheduling system ensures that each owner has fair and flexible access to the home throughout the year, eliminating the potential for disputes.
This model is particularly appealing in the luxury market. By dividing the costs among multiple owners, individuals can access high-end properties that might otherwise be beyond their financial reach as a sole owner. Plus, delegating property management means that owners can enjoy their time at the property without the worry of ongoing maintenance tasks, or the pressure to tackle a chore list during their stay.
To get the co-ownership experience, Pacaso invited me and my family to stay at Fox Hill. This Estate Collection property is located in Chatham, Massachusetts nestled between Crows Pond, Eastward Ho, and Pleasant Bay. Not only is the home outfitted with all the security you'd expect for a $15,000,000 estate, but it's designed to be equal parts luxurious and practical. Buyers of Pacaso homes aren't burdened by the need to renovate and decorate. The spaces are flawlessly considered, floor to ceiling, and fully furnished in an effort to create a truly turnkey experience for a co-owner. A sauna, heated pool, elevator, and private dock were distinguishing amenities of this home, but the quality furnishings, appliances, and artwork enhanced the space and made it the kind of house where you could enter and immediately exhale.
Why Pacaso? The Smart Choice for Luxury Co-Ownership
Pacaso isn't just any co-ownership company; it’s the nation's leading marketplace for co-owned vacation homes, and has a refined process with proprietary systems. The company helps consumers navigate the homebuying experience, while also striving to make luxury home ownership accessible to more people.
- Comprehensive Management Services: Pacaso handles everything from property management to scheduling and maintenance, allowing you to enjoy your home without the typical hassles of ownership.
- Easy financing: Pacaso offers specialized financing options, making it easier to purchase your share of a luxury home (a true necessity, since co-ownership mortgages don’t exist).
- Global Reach: The majority of Pacaso properties are based in the United States, but they are expanding abroad with locations in Paris and London. Buying a vacation home through Pacaso allows you to get abroad without dealing with international property purchase complexities.
- Shared Expenses (and Accountability): Simply put, it's easier to buy a second home when you're not footing the monthly payment all by yourself. With property management checks and cleaning services between co-owner stays, each co-owner is accountable for the condition of the home during their stay. If something is damaged, the owner who caused the damage is responsible for paying for repairs.
- It's Your House — and Houses Appreciate: Unlike a timeshare, you're buying a house, so you should look at it as an investment property. If you want to sell the house, it's your choice. It's harder to do that with a DIY co-ownership arrangement, especially when friends and family are involved, and it's nearly impossible to sell a timeshare for a profit. With Pacaso, you can name your price, and the company will help to find you a buyer for your share.
- Easy Scheduling: Pacaso's proprietary software for scheduling, SmartStay, helps manage the distribution of the shared calendar. It fractions off an even amount of time at peak season, non-peak season, and holidays, depending on the percentage of ownership.
- Anonymity and Privacy: You won't have to be friends with the other co-owners. In fact, they won't even know who you are. They won't be dropping in unexpectedly during your holiday weekend or pressuring you into hanging their artwork in your bedroom. As seamlessly as a hotel, the home is thoroughly turned over between stays to maximize the level of satisfaction for all guests.
- A Network of Luxury Homes: Pacaso manages one-of-a-kind luxury homes around the globe and allows co-owners to swap locations. Unlike a rental property swap or a timeshare, you're guaranteed to be staying at another Pacaso property that's maintained to a high standard.
The Financial Benefits of Co-Owning a Luxury Property
Co-ownership offers significant financial advantages compared to traditional property ownership. By sharing the costs with other owners, you can purchase a share in a high-end, expensive property that might otherwise be unaffordable. This allows you to invest in a prime real estate market without committing the full amount of capital required to buy the property outright.
- Initial Cost Savings: Sharing the costs with co-owners makes luxury properties more accessible.
- Long-Term Appreciation: Luxury properties in desirable locations often appreciate in value, and co-ownership allows you to benefit from this potential growth. A recent study by RCLCO revealed that shares of Pacaso homes have achieved a Compound Annual Growth Rate (CAGR) of 9.7%. The stat compares data to local market performance and shows that Pacaso sales outperform their respective markets by an average of 4.7%. In the Napa-Sonoma market, appreciation outperforms by an incredible 12.1%.
- Tax Benefits: Depending on your circumstances, you may be able to deduct certain ownership expenses from your taxes. Pacaso can provide guidance on how to maximize these benefits.
- Risk Mitigation: Pacaso’s approach spreads the costs of unexpected repairs or maintenance among co-owners, reducing the financial strain on any one individual and ensuring the property is well-maintained. Also, if one co-owner damages the property during their stay, they are held 100% accountable for the repairs.
How to Get Started with Pacaso: A Step-by-Step Guide to the Buying Process
If you’re interested in exploring co-ownership with Pacaso, the process is straightforward and user-friendly. Here’s how it works:
- Browse Properties: Start by browsing Pacaso’s curated selection of luxury homes on their website. You can filter properties by location, price, and share size to find the perfect match.
- Choose Your Share: Once you’ve found a property you like, decide how much of it you want to own. Pacaso offers ownership percentages ranging from one-eighth to one-half of the property, depending on how much time you plan to spend there.
- Secure Financing: Pacaso’s financing partners will work with you to secure a loan tailored for co-ownership. This makes it easier to purchase your share without the complications of a traditional mortgage. Plus, the rates are currently better than a traditional mortgage in most markets. It's worth noting that you can also buy the share without getting a loan through Pacaso, whether you choose to use a HELOC or another type of self-financing.
- Purchase and Close: After securing financing, you’ll finalize the purchase of your share. Pacaso handles all the paperwork, from the co-ownership agreement to the legal agreements, making the process smooth and stress-free. At this point, you own real property with an agreed ownership share.
- Enjoy Your Home: Once the purchase is complete, you can start enjoying your new home. Pacaso’s scheduling system ensures that you have access to the property when you want it, and their management services take care of everything else.
FAQ
What are the costs associated with Pacaso co-ownership?
The costs include the purchase price of your share, ongoing management fees, and your portion of the property’s operating expenses. You'll get a clear breakdown of these costs upfront, so there are no surprises.
Are there any disadvantages to Pacaso's co-ownership model?
Depending on your expectations for a vacation home, you won't be able to rent out your shares to a third party (so no, you can't get rental income by listing your dates on AirBnB). And while the scheduling software does a great job allowing co-owners to swap dates, you still may not get 100% of the dates you'd like over the course of the year.
Can I sell my share if I no longer want to co-own the property?
Yes, you can sell your share and ownership rights at any time. And it's more promising than trying to sell a timeshare. On average, Pacaso homes sell for 4.7% above the market rate. In contrast, a timeshare is not a real estate asset and you don't own anything. Pacaso will help find a new co-owner, you’ll benefit from any appreciation in the property’s value, and any remaining co-owners won't be inconvenienced in the slightest.
How does Pacaso manage the property?
Pacaso handles all aspects of property management, from maintenance and repairs to scheduling and cleaning. Property taxes and insurance are pass-through costs to the co-owners, but a property management fee makes it possible for Pacaso to manage and care for the space so it's not on your mind.
