Pacaso, which is a relatively new (2020) co-ownership vacation home company, has been making the rounds online lately. That’s because the founders are accomplished, they’ve reserved their Nasdaq ticker, and they’re raising money from retail investors through their website.
Fractional ownership is a topic we’ve discussed a number of times on the blog. And as I’ve said before, I think it’s an answer to this real estate problem: “I have a desire to own a home, or multiple homes, around the world. However, I don’t know how often I’d actually use it/them, and this desire is both expensive and a pain in the ass.”
So it’s not surprising that the market invented timeshares, membership clubs, and fractional ownership models. Timeshares, however, have a bad rap and generally don’t involve the direct ownership of real estate. Instead, what you’re buying is the right to use a property during a certain period of time.
Fractional ownership, on the other hand, typically does involve direct ownership of the asset. In the case of Pacaso, my understanding is that each property is acquired through a single-purpose entity (usually a US LLC). Buyers then acquire a membership interest in that SPE.