Austin Allison is no stranger to the predilection of consumers to avoid change at all costs. “Every company that is doing something new faces resistance, even Dotloop,” says Allison, who founded transaction management company Dotloop in 2009. “Who would’ve thought electronic signatures would be a controversial topic? But, for five years, we had to convince people that electronic signatures were secure and enforceable.” Zillow purchased Dotloop in 2015.
That’s why he takes the controversy over his newest company, Pacaso, a two-year old PropTech co-ownership platform, in stride. In Sonoma, California, homeowners are protesting the entrance of Pacaso into their neighborhoods. The owners, who even have organized groups plotting to stop the company, have an issue with what they call “transients” in their neighborhoods due to the fact that a Pacaso home can have up to eight co-owners. Never mind that the co-owners, according to an article on Inman News, “can afford to buy shares in homes valued at over $2 million.” After all, Pacaso is largely in the ultra-luxury markets of Aspen, Miami, Palm Beach, Park City, Utah, etc.
Co-ownership as a positive to the industry
Allison notes that some of the controversy is about not understanding the concept and the positives they bring to the market. He describes it this way, “We have a shortage of supply and an abundance of new demand that is largely fueled by these second home buyers who now have the flexibility to work remote either part-time or full-time. And that’s driving up home prices for locals. So, I understand that people are frustrated about housing affordability; it’s a real problem.”
He says that co-ownership is part of the solution. “Co-ownership makes better use of underutilized supply. I’ve [recently] spent a week in Miami and [the city leadership] recognizes that these homes sitting empty throughout the year are bad. It’s been bad for housing affordability. It’s bad for the local economy. Bars and restaurants want to survive during the shoulder seasons. They want people, they want owners in the homes shopping at their stores. So this [co-ownership] is really a good thing, but it will take time to understand.”
Most areas, like Miami, are more accepting of the fractional ownership concept, which Allison says is, “similar to a few families going in on a vacation property together,” and not a timeshare concept. “There are 40,000 homes in the [Miami] market already owned in the exact same structure as Pacaso. We didn’t invent the concept of co-ownership. It’s actually very common in second-home markets. What we did was invent a service that makes co-ownership easy.” Pacaso handles everything from maintenance and designing to furnishing the houses and a shared calendar to enable owners to schedule easily.
Allison says the Pacaso idea came to him about seven years ago when he and his wife become second home owners in Lake Tahoe. “We thought, most families can’t afford a second home but dream about it. We were able to realize that dream. We didn’t just buy a home. We bought a community, a second group of friends. We opened up a new chapter in our lives that we didn’t know existed, and I wanted to find a way to make that possible for more people,” he says.
Last month, the company announced a Series C round of financing, $125 million, led by SoftBank. “That brings our total funding to $215 million,” says Allison. Pacaso is currently in 25 destinations in the U.S. and are expanding into Europe. “We just announced that Spain will be our first European market,” he says. The company will also move into more “reasonably priced luxury markets” moving forward. “In most markets where Pacaso manages home the average price point is two to four times the median in the market,” says Allison. “We want to expand into second home destinations that are more reasonably priced luxury markets.” Pacaso allows between two and eight owners of each home and charges a monthly fee.
Looking forward, Allison would like to have real estate professionals add Pacaso to the list of options they offer to consumers. “Buyers have been priced out of many markets, so for clients who want to own a second home but are priced out of the market, the agents can offer this solution,” he says.
The company recently announced that it will begin accepting cryptocurrency as a new payment option for ownership shares in second homes. “Digital currencies and the blockchains that power them are seeing increased adoption across the real estate industry, and a crypto payment option is a recurring topic in our conversations with prospective buyers of second homes,” said Allison. “As we expand internationally and put second-home co-ownership within reach for more people across the globe, we’re thrilled to be able to respond to that demand and extend as many payment options as we can to our customers.”
Allison says that they don’t share the number of homes they manage. And, right now, the company doesn’t plan to go public soon. “When the time is right, we will. We don’t have any specific details to share in terms of when that might be, but we’re always evaluating financing options are in conversations with financial investors, both in the private and public markets.”