If you think access to housing is wrong, then see what happens when a Silicon Valley company turns your neighborhood into a timeshare

One day you are in the garden of your house and you see a drone taking photos of the houses next door, your neighbors told you that they sold it to a company, without giving more details. You investigate and an unknown company called Pacaso appears behind the purchase of the neighbors' house. What is Pacaso?

Grace & Frankie is a Netflix series starring Jane Fonda and Lily Tomlin about two women who are abandoned by their husbands and move to the house that they had bought half, separately they would not have been able to buy it, where they have to live together. Buying a home with others is something that we have always thought about, but it is something that is not usually executed due to the problems that sharing it entails. What if a solution had been reached?

I think Pacaso offers luxury, affordable luxury, or at least more affordable. The luxury of having a second home with “wow factor”. If on occasion I have spoken of the typical beach apartment where we have one or two families, children, pets, grandparents, huddled together in one, two or hopefully three bedrooms, all enjoying the proximity to the sea. In the case of Pacaso, we are talking about the fact that sharing a home has a higher cost than what it costs to acquire and maintain a home. Also with the touch of "investment", that is, with the expectation that what is paid will be revalued over time.

affordable luxury

Pacaso acquires homes, makes a minimal reform, creates a company (LLC) that owns them and minimally reforms them, apart from decorating them by a professional. It then puts one-eighth of these homes up for sale to buyers who may want such a home but are unwilling or unable to buy the entire home. Its goal is to make second home ownership more affordable and it was founded in October 2020.

Pacaso also looks for a local company that maintains them to perfection, cleans between uses of the owners, as well as mediates between the owners in case of conflict, provides the digital infrastructure that allows to distribute the times and all for 99 dollars a month, for each fraction of an eighth of the dwelling. In other words, Pacaso allows the investment to be made and becomes a subscription, although as it states, it does not maintain ownership of it and the owners of the company can do without Pacaso services whenever they want. In practice, it will be quite difficult for five of the eight owners to agree on kicking Pacaso out.

In addition, the fraction of the house can be sold at any time after the first year. The owners cannot rent the house, but they can transfer their days of use to friends or relatives. With an eighth of housing, each owner is entitled to 44 days a year, in addition to the fact that he can always have at least one national holiday. According to Pacaso, its business model is far removed from timeshare or "timeshare" as it is known in the US, since it involves owning an asset and not buying a temporary right of use (in Spain timeshare is regulated and forces it to be for a limited period of time, ceasing to be a property, despite its name). Also, unlike other timeshare systems, owners can do without Pacaso if they wish.

The homes that Pacaso is looking for have, in principle, a cost of more than two million dollars (to be distributed among eight co-owners), and have been decorated and left to perfection. They also have everything we may need and are located in the most popular vacation centers in the US, such as Aspen in Colorado or Malibu in California. Pacaso has been one of the fastest growing US companies to achieve “Unicorn” status, that is, valued at one billion dollars. What is the problem, then? It seems that Pacaso is not being very well received by the neighbors.

Neighbors against Pacaso

The residents of the houses in Pacaso fear that this company will raise prices, and it is that, like investment funds or crowdfunding companies, as we have already mentioned, they pay for the houses with an extra cost. They also fear that their new neighbors will end up making a lot of noise and spoil the tranquility, they also fear that it will destroy the spirit of their neighborhood and become a kind of theme park for adults.

In addition, although tourist rental may be prohibited in a specific neighborhood, Pacaso ends up bordering on this type of prohibition. For some residents of the houses in Pacaso, it is nothing more than a "timeshare" (timeshare) with airs. In addition, in some cases they are acquiring homes near schools and for prices below two million dollars.

Of course, by the time the new owner drives to his home, finding signs that do not welcome him but reject his presence is not a dish of good taste, and this can be a problem for the founders of Pacaso, who can be end up running into a problem if the new owners feel rejected by their neighbors.

Although at the moment Pacaso's operations are limited to some very specific areas of the US, the company's plans are to expand to the rest of North America and Europe, apart from the copies of its business model that may arise in other areas of the world. After all, it is still a replicable business.

Ask the readers, do you think this ownership model will succeed and we will see more similar cases over time? Would they partially purchase a second home under this model, or would they prefer to own an entire home?

In The Salmon Blog | Is a flat on the beach a horrible financial decision?, This is how you can value a home online without hiring an appraiser and Singapore housing: quality, affordable, abundant, but with a dark side

Via | NPR

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