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

Published Date: January 5, 2023

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Home co-ownership has been around for a long time, and it comes in many forms. It can be as simple as a married couple owning a property together or it can be more complex, legally or financially. Spouses and family members often choose joint ownership of a primary or second home so when one owner dies the property’s title passes to the surviving owner or owners. Other types of co-ownership, like joint tenancy and tenancy in common, are more typical options for unrelated owners, such as those who hold title in an investment property.  Joint tenancy allows you to leave your share of the property to anyone you wish, while tenancy in common divides your share among the other tenants in common when you pass on.

Co-ownership benefits

The benefits of home co-ownership start with the opportunity to buy a more expensive home than you could afford on your own. That means less money for a down payment and a lower monthly mortgage, plus shared costs for the home’s maintenance. 

Co-ownership downsides

DIY co-ownership can get messy. Buying a home has its own set of complexities without adding in family dynamics and business relationships.  It’s a good idea to hire a real estate attorney to draw up a sound legal agreement to make sure you are protected. 

A smarter option

Pacaso has developed a fresh take on co-ownership, offering luxurious single-family second homes in sought-after destinations. Unlike DIY co-ownership, Pacaso sets up a property-specific LLC which details the management, operation and voting procedures for each home. Buyers purchase ownership interest, ranging from 1/8 to 1/2, in a fully managed Pacaso. This is true real estate ownership in a property whose value tracks the surrounding single-family home market.Pacaso co-ownership is more flexible than a timeshare, more private than a fractional resort property, and costs dramatically less than whole home ownership.Pacaso 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 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 1-2 weeks a year in the same resort, but come with many downsides. 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 often rigid, and “owners” may 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. 

Definitely not a fractional

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 timeshares in that they offer fewer shares, so owners get more use time. They are also costlier than 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. Pacaso’s LLC co-ownership model builds on the fractional model, 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 professionally furnished, one-of-a-kind private retreat accessible only to owners and their guests.Pacaso co-ownership delivers the benefits of whole second home ownership without the downsides. Check out our listings to get started. 

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