Second Home Co-Ownership Comparison | Pacaso

How co-ownership compares with other ways to own a second home

Pacaso Crew

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Co-ownership is a new model pioneered by Pacaso that dramatically reduces the cost and complexity of purchasing and owning a second home.

The process is straightforward: Pacaso acquires private homes in choice residential neighborhoods and structures them as eight-member LLCs. Buyers then purchase ownership interest in the home ranging from ⅛ to ½. This is true real estate ownership in a property whose value tracks the surrounding single-family home market.

Co-ownership is more flexible than a resort timeshare, more private than a fractional resort property, and costs dramatically less than whole home ownership.

Co-ownership means owners live, work remotely and enjoy their home, just like other members of the community, so they can become part of that community. Owners enjoy equitable access to their home and none of the maintenance and management hassles commonly associated with owning a second home — all at a fraction of the cost of whole home ownership. 

Definitely not a resort timeshare

“Timeshare” is a broad term that refers to any type of real estate owned and used by multiple people. However, it is commonly associated with buying the right to use a condo unit or hotel room in a resort community for vacation purposes. 

They work best for people seeking a couple weeks a year in the same resort, but come with many downsides. 

Hotel timeshares have proven to be poor investments. Most lose 30-50% of their value and are notoriously illiquid, according to the 2020 Sherpa Report. Use rights are rigid and “owners” often feel – and act – more like renters.

By contrast, co-ownership in a second home gives you true ownership in a place you can call your own. All owners agree to a Pacaso code of conduct and share an owner mentality. Your second home always feels like your special place. 

A less common ownership model is fractional or shared resort ownership. You may see these marketed as “residence clubs.” 

Fractional resort ownership works for people seeking a hybrid hotel/resort/second home experience.

These “fractionals” differ from resort timeshares in that they offer fewer shares, so owners get more use time. They are also costlier than resort timeshares, averaging $161,500 per share in 2019, according to Ragatz Associates. Additionally, members must pay costly annual membership dues. Fractionals often offer hotel-like services and amenities, but do not guarantee use of a specific space. Owners buy access to a type of unit at a club or resort, not a home. 

The LLC co-ownership model offered by Pacaso builds on the fractional model inasmuch as both offer true property ownership. But a Pacaso is more personal and private in a prime residential location, not a hotel. Each home is a one-of-a-kind private retreat accessible only to owners and their guests.

Whole home ownership

The best-known option is the outright purchase of a second home. It’s great for people who use their second home often, but for those who don’t, whole ownership has serious downsides.

Whole second home ownership is cost-prohibitive for many. And those who choose this path often struggle to justify maintenance costs and dislike the hassles involved in managing the property. Many owners of second homes express regret at not using it as often as they would like, and feelings of waste at letting it sit empty. 

A smarter option

Co-ownership of a second home delivers the emotional benefit of whole ownership — having a beautiful private retreat — without the downsides.

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