The Newfangled Real Estate Companies Making Vacations Easier

Real EstateThe Newfangled Real Estate Companies Making Vacations EasierWhether you’re looking to rent or buy, a host of innovative firms like newcomer Pacaso have never offered more property options

By Stefanie Waldek

March 11, 2022

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Villa Papillon in Antigua

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Real Estate: When it comes to buying a vacation home, the process should be simple in theory. You buy a second property, and you stay in it when you want to get away from your primary residence for a while—no worrying about booking availability, check-in or check-out times, or dealing with poor interior design choices.

But what about maintenance when you’re not visiting your vacation home? Do you have someone around to water your flowers, dust your surfaces, or take care of any plumbing or electrical emergencies? How about paying taxes and bills? By nature, a second home isn’t meant to be lived in year-round, but expenses add up quickly whether or not you’re staying there. That’s why many second-home owners find ways to make ends meet, from short-term rentals to co-ownership.

In many cases, owners will turn to platforms like Airbnb or Vrbo to earn extra income—or at least cover maintenance costs—by renting out their vacation homes while they’re not there. But in some cases, this means that properties toe the line between being an owner’s vacation home and a full-time rental property.

Take, for instance, Villa Papillon, a breathtaking new-build villa in Antigua owned and decorated by the mother-daughter design duo Sarah and Rosie Ward. For vacationers the property is a treasure—it’s an impeccably designed home, far above and beyond the majority of what you’d find on a rental site. But per its availability calendar, it’s open for rent most weeks for the next year, indicating that its owners may not use it personally very much at all, whether by choice or necessity.

While listing a vacation home is a reasonable way to financially recover from your initial investment and regular expenses, it also comes with risks, like having unruly guests wreck your space. One new platform is seeking to minimize those risks. MyPlace is an app that allows homeowners to share their home’s availability to a select network of potential guests—family, friends, or friends of friends. There’s no public listing at all. “We believe that trust comes through social proof and personal introductions between friends, not reviews from internet strangers,” MyPlace cofounder Zach Bell, who partnered with Rameet Chwala on the product.

A home for rent in Ibiza, Spain via the MyPlace app.

@sodalime_

Homeowners can even set pricing tiers for the different connections they make on the app: Family (free), Friend (discounted), and Acquaintance (closer to market value). But don’t expect to use the app if you’re just looking to earn extra income. “MyPlace is not designed for hospitality businesses on the open market but rather for changing our approach to travel that is safer, more private, and more authentic for our users,” Bell says.

Then there’s the flip side of the vacation home coin—co-ownership. If you have no desire to deal with the hassles of renting out your unit (or even the hassles of maintaining it while it sits empty), you can purchase a fractional share of a vacation home through real-estate start-up Pacaso, founded by Zillow alumni Austin Allison and Spencer Rascoff.

A property from Pacaso in Park City, Utah.

Buyers can purchase shares of a luxury vacation home in more than 30 top vacation markets around the world, from Palm Springs to Ibiza, which provides them with a certain number of days at the home that corresponds to their ownership percentage. Pacaso handles pretty much everything—finding other co-owners, home maintenance, and housekeeping, among them—making the ownership experience hassle-free.

Yes, it might sound like a timeshare, but there are key differences. “If you and four friends bought a home together, you would never consider that a timeshare, it's co-ownership with a group of people. One of the biggest differences between Pacaso and a timeshare is what you actually own. With Pacaso, you own a true real estate asset. Your share is real property, not simply a block of time," says Chad Graven, a sales manager with Pacaso. To that end, owners who buy through Pacaso aren’t just buying time at the home—they actually own the asset, and after a year of ownership, they can sell it at market value.

Indoor-outdoor living at a Pacaso property in Napa, California.

Pacaso also caps each home to eight shares (or four in the case of Maui, the company’s newest market, which just launched this week), with no owner owning more than half of the house. Then, between you and your co-owners, no one is assigned specific weeks—bookings are handled through the app, which uses proprietary software to ensure a fair division of time, particularly over popular dates like holidays.

Graven explains there are typically three types of people who purchase second homes through Pacaso. The first is an affluent buyer who “just wants to push the easy button,” allowing the company to handle all the details, like maintenance and housekeeping.

“Lani,” a property from Pacaso in Kapalua on Maui in their newest location, Hawaii.

“Then we have where our mission is really driven, and that’s making it more possible for people to buy second homes,” he says. Buying a share of a home rather than an entire home outright is obviously far more affordable, and given that many vacation homes sit empty throughout the year, fractional ownership reduces wasted spend. Thus the second type of buyer is an aspirational second-home owner for whom the barrier of entry has been lowered.

And the third type of buyer is an entirely different person. “It’s people saying, ‘A second home was never really my top priority because I want to go to all these places. I go to Europe, I go to Aspen, I go to Miami,’ and so on,” says Graven. So instead of owning one home in one of those destinations, they buy shares of Pacaso homes in multiple places. “They can still do their traveling, but also have equity ownership and property,” adds Graven.

A Pacaso home in Malibu, California.

Pacaso’s model hasn’t been without its detractors, primarily locals wary of Airbnb-style party houses. But Pacaso bans both events and short-term rentals—only owners and their guests can stay at their homes. And the company is making a concentrated effort to involve the community, whether through employment managing the homes or by donating portions of sales to local charities. Furthermore, Pacaso only purchases homes that are well above the median home value, ensuring that locals aren’t priced out of real estate due to limited inventory, which is a major concern regarding short-term rental properties.

If you’re thinking about buying a vacation home, it’s worth carefully thinking about your intended use of the home and considering how much time and money you’re willing to invest in its maintenance. Take the time to investigate multiple avenues, whether you decide to offset costs by listing on rental platforms like Airbnb or MyPlace or purchase a fractional share through a platform like Pacaso. There’s no single “best” way to go about second-home ownership, but there certainly are smart ways.