Zillow co-founder Spencer Rascoff is at it again, this time with a startup called Pacaso (pronounced “picasso” like the famous painter) that aims to take on the timeshare market by enabling fractional ownership of second homes or vacation homes. The startup raised a $17 million Series A funding round along with $250 million in debt to buy fractional interests and provide liquidity to the buy side of their marketplace.
Pacaso’s model uses LLCs to allow homebuyers to purchase as little as 1/8 and as much as 1/2 of a vacation home.
Who are investors in Pacaso?
- Maveron (lead investor)
- Global Founders Capital.
- Howard Schultz (former Starbucks CEO)
- Tom Ferry (leading real estate coach)
- Greg Schwartz (former Zillow President of Media and Marketplaces)
- Jeff Wilke (Amazon CEO of Consumer Worldwide)
Some things to consider:
- buyers will need to get over the fact that they don’t know who they’re co-owning their second home with (unless it’s Pacaso)
- this model may resonate most with owners of vacation homes looking to sell down their equity to free up cash and drive higher utilization of the home
- how well will Pacaso manage scheduling, damages, cleaning, fractional share resales?
- how might this affect vacation rental platforms the likes of Airbnb and VRBO — will their wealthier users opt into fraction home ownership?
- resale of fractional interests should benefit from LLC structure from a tax perspective
- how liquid will the market be for the resale of fractional interests?
We asked several high net worth and real estate owners for their thoughts on Pacaso. The unanimous feedback was that, while fractional home ownership is an interesting concept, few could see themselves as an early adopter of the service.
It will be interesting to track for possible pivot to larger more practical asset class such as RoofStock is doing with rental properties.