Austin Allison and Pacaso are coming for the masses

At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.

Pacaso 1.0 sought to define a new market, one that offered high income earners the chance at a slice of paradise. But that didn’t exactly “democratize” second homeownership for the masses. 

Enter Pacaso 2.0.

In March, the company leading the fractional second homeownership market announced it was evolving. It would begin offering one-eighth shares in homes at lower price points than ever before. In addition to the typical Pacaso offerings in markets like Lake Tahoe, Park City and Jackson Hole, the company set its sights on expansion into Chicago, Detroit, Milwaukee and more.

It leaned on its powerful algorithm to gauge buyer demand more accurately and direct it to more deals in more markets and at a wider range of price points.

The world is now witnessing Pacaso in its second chapter, and Allison sat down ahead of Inman Connect Las Vegas to peel back the curtain on how the company got here and where it’s going next.

INMAN: In March, Pacaso announced that you were kind of broadening the buy box into a new, lower price point. Can you walk me through the decision-making process for that and let me know how things are going? 

ALLISON: It has always been our intention to make second homeownership possible for more people. When we launched the company in 2020, we had to start somewhere and we decided to start at the ultra-luxury end and ultra-luxury markets.

Price points will come down because when you diversify the number of markets that you serve, you have a wider range of price points. So we’re really excited to offer more selection for consumers. And someday we hope to make second homes available all over the world at price points even lower than what we have available on the website today.

I was surprised to find Pacaso in Chicago, Milwaukee, Detroit — cities all over the country. And it made me realize that while it was under the radar for me, you guys are expanding all over the place. Can you tell me about the strategy behind what markets you go into? I noticed there weren’t any in New York City. That must be a regulatory thing. But talk to me about the timeline and the strategic process for the markets that you’re in today. 

We think about our business like a tech-enabled marketplace that is connecting aspiring homeowners with empty second homes. One of the big things that we launched in March was a new product experience that enables us to make available inventory in lots of different markets. What that does is it really puts the power in the hands of the consumer to tell us which markets they’re most interested in. 

When you go to Pacaso today, you will see homes in most of the U.S. as well as Paris, London and Mexico. When we see enough buyers interested in a particular market at that moment in time, we would then get involved, work with the listing agent to get the home under contract and turn them into a Pacaso. If there’s not enough demand in a given market, then we don’t transact in that market until there’s enough demand. 

It’s very much a buyer-led, consumer-first market expansion strategy. 

Let me ask you this. You’re expanding your footprint nationwide. Let’s call it Pacaso 2.0. Is that a tougher sell to Realtors and the public than it was before?

I would describe Pacaso 1.0 as a more asset-heavy business model. We were buying the homes before we had the demand and the model was largely limited to very wealthy buyers in very high-end markets. 

Pacaso 2.0 is a more asset-light model where we are aggregating the demand before we transact on the home. And it’s a model that serves a broader audience across more markets and more price points.

It is true on some level that more markets adds more complexity and more work. But we’ve been doing this now for almost four years. We have an incredible team, an incredible tech platform. Lots of learnings from the last four years that have enabled us to build something that’s quite scalable into new markets. The way that we curate listings is more refined than it once was. The signal that we have from buyers is much stronger than it once was, because we have a bigger audience and more brand awareness. 

Are we still at Pacaso 2.0? What’s Pacaso 3.0 in that case?

We’re just at the early stages of Pacaso 2.0. I kind of think of them as chapters. 1.0 was the first chapter. That lasted three and a half years. In March we turned the page to the second chapter.

I don’t know how long that chapter will last before we turn the page to the next one, but there’s a lot of opportunity around making this offering available to more people, more markets, more price points. And I feel like we’re just scratching the surface. We definitely have several years in this 2.0 period ahead of us. 

That being said, there’s tons of innovation that you can continue to expect from us. We’re always looking for ways to deliver more value for the customer. We’re introducing things like our Pacaso services, where we’re seeing not just in the second home use case, but we’re seeing primary homeowners resort to co-ownership as a solution to the housing affordability problem.

You guys also started offering the public access to services that help them turn their own homes into Pacasos, in a way. What was the point of that?

Probably the biggest reason is just the fact that people can’t afford to buy homes anymore. And that problem is only getting worse, it’s not getting better. So the ability for people to pool their resources together and buy a home that they would have otherwise not been able to afford on their own is an inevitable innovation that’s going to continue to play out. 

But it’s hard. It’s very hard to do on your own. Managing the property’s hard, coming up with the right ownership structure and operating agreement and rules is hard. Financing is hard. Resale is hard. All these things are very hard if you’re trying to do this on your own. But we’ve invested millions of dollars perfecting these processes. Why not make it available to other people? 

The more co-ownership prospers as a category the better off we are as a nation in the context of providing housing solutions for consumers. And obviously, Pacaso will benefit from that as well being the global leader in co-ownership for second or vacation homes.

Email Taylor Anderson