In view of rising real estate prices, a real estate start-up founded in October by two former Zillow managers sees an opportunity.
Cincinnati-based Pacaso buys luxury single-family homes and then sells them to groups of buyers under a partial ownership model as part of an LLC, co-founder and CEO Austin Allison told CNBC on Friday.
“Most second homes are vacant eleven months a year,” Allison said on The Exchange. “We are simply making better use of the housing stock by modernizing this old practice that we call co-ownership, which has existed for years.”
Allison said the company operates differently than a timeshare, which sells the right to use a property for a period of time.
The company also offers integrated finance, interior design, property management and proprietary planning technology services.
“Imagine you and a small group of friends want to own a house together,” said Allison. “That’s what Pacaso does, except we take care of all the details – everything from billing to maintenance to design – so you can enjoy your second home and not worry about the headaches.”
Up to eight buyers can buy shares in a single property, Allison previously told the Napa Valley Register, but most of the company’s homes are split between five and six buyers. Pacaso owners can sell their stake after 12 months of home ownership.
“The owners are in complete control,” he said, adding, “Pacaso is effectively a real estate manager once you buy your stake in an eighth or a quarter of the house.”
Vacation home prices rose during the Covid pandemic, averaging $ 468,000 in seasonal cities, according to a report from real estate broker Redfin. Demand for these second homes was primarily driven by wealthy professionals who could work remotely, Redfin CEO Glenn Kelman told CNBC in October 2020.
However, according to Redfin, the number of buyers who have set mortgage rates on vacation homes fell 11.1% year over year this June, signaling a potential end to the surge.
Pacaso announced in March that it raised $ 75 million in a Series B funding round, bringing the startup to $ 90 million. The company now claims “unicorn” status, which means the privately held company is worth more than $ 1 billion.