Understanding the Cost of Second Home Ownership | Pacaso

Understanding Pacaso ownership costs

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Amie Fisher

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If you’re considering a second home purchase, you probably want to know the bottom line. Sure, it’s more fun to browse listings and imagine yourself poolside at your new home, looking out at the ocean waves or rolling hills. But cost is part of the equation, and Pacaso is committed to full transparency. We want to make sure buyers understand the cost breakdown upfront, so there are no surprises later on. Once you find a home you love, a Crew member will walk you through the costs associated with the listing. In the meantime, if you’re trying to understand the whole financial picture, our pricing model covers three main areas:
  • Share price
  • Monthly owner expenses
  • Pacaso’s management fee
Here’s how we approach each cost area.

Determining the share price

When you browse Pacaso listings, the sale price reflects the cost to purchase ⅛ ownership of the home. If you want more ownership, multiply that price by the number of shares you wish to purchase, up to four (½ ownership of the home). We determine the sale price of a share by adding these costs:
  • Whole home purchase price. This one is self-explanatory — it’s the amount Pacaso paid to acquire the home on the open market. 
  • Home upgrades and closing. We give each home a design makeover to create livable luxury — a beautifully and comfortably designed home, with all the amenities you need to enjoy your stay. This includes big-ticket items, like high-end furnishings and state-of-the-art appliances, and small details, like board games and handy kitchen gadgets. We bring in professional interior designers to customize each home, and we install the latest home technology and smart home features. We also calculate the real estate transaction costs (agent commissions, inspections and closing costs).
  • Pacaso service fee. This one-time fee covers the costs of buyer aggregation (finding and vetting qualified owners) and LLC formation (including legal fees).
  • Financing. For buyers who choose to finance up to 50% of their purchase through Pacaso’s banking partners, a financing fee will be assessed at closing.
A summary of these costs can be accessed via the listing details for any available Pacaso. Pacaso Preview listings are homes under consideration for purchase; we use the same criteria to estimate the share price for a Pacaso Preview, but the price may change slightly if the home becomes available for co-ownership. For example, we would determine the exact cost of upgrades once we walked through the home with our design team.

Keeping the lights on

As with any home, there are utilities and other ongoing expenses associated with Pacaso ownership. These costs ensure your home is well-maintained and ready for your next stay. Because Pacaso manages the home, you don’t have to worry about any of the usual homeowner details or hassles — we take care of the bills, cleaning and maintenance, and we even handle the property tax payments. We budget for owner expenses annually and break the cost into 12 fixed monthly payments. Costs are passed through to owners, with no markup, based on the number of shares they own. Monthly payments are deposited into the LLC account, and Pacaso uses the funds to cover these expenses as needed:
  • Preventive and routine maintenance. Depending on the property, this may include landscaping, pool maintenance, snow removal, HVAC servicing, gutter cleaning and more.
  • Property management. We work with experienced local property management companies who take care of the day-to-day needs of the home. We’ve established a technology-enabled feedback loop between owners and property managers to ensure communication is streamlined and the quality of service is exceptional.
  • Cleaning. Each home is thoroughly cleaned and inspected after each owner’s stay, and consumable supplies, such as paper goods, are replenished.
  • Utilities. This includes gas, electric, water, sewer, garbage and internet/TV — the basics to keep your home functional.
  • Taxes and insurance. Pacaso manages the payments for property taxes and homeowners insurance premiums when due. We’ll provide an annual K-1 tax form for each owner. Learn more about ownership and tax reporting in a multi-member LLC. 
  • Reserve fund. As any homeowner knows, things break or wear out, so Pacaso maintains reserves in the LLC to cover those unforeseeable or longer-term expenses, such as a roof replacement. 
We will only increase monthly owner expenses if it’s needed to cover increases in actual costs of the home, such as insurance, taxes or other increased rates. Any necessary adjustments are made annually, and all cost statements are available to owners upon request.

Providing a fully managed experience

For many people considering a second home purchase, one of the biggest downsides is the burden of owning another property. If you only expect to use your second home a few weeks or months a year, you may decide to rent it out — and deal with the headaches of vacation rental management — or struggle to find reliable local vendors to help with maintenance issues, especially if problems arise while you’re away from the property. Pacaso relieves you of these worries and hassles by managing all aspects of homeownership. We charge a management fee of $99 per share, per month, which covers a range of services, including:
  • Aggregating and managing the monthly owner expenses and taxes
  • Overseeing the property management company
  • Maintaining the LLC and resolving any disputes between owners or the municipality
  • Continually innovating and improving the Pacaso app and other digital technology
  • Providing dedicated owner support 
The monthly management fee is fixed and will not increase annually. Pacaso is dedicated to transparency in pricing, and we believe our co-ownership model offers an equitable and cost-efficient way for more people to experience the joy of owning a second home.

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