Second Home Co-Ownership Comparison

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

Co-ownership downsides

DIY co-ownership can get messy. Buying a property has its own set of complexities without adding in family dynamics and business relationships. It’s a good idea to hire a good solicitor 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 second homes in sought-after destinations. Unlike DIY co-ownership, Pacaso sets up a property-specific limited company which details the management, operation and voting procedures for each property. Buyers purchase ownership interest, ranging from 1/8 to 1/2, in a fully managed Pacaso. This is true ownership of a property whose value tracks the surrounding property market.Pacaso co-ownership is more flexible than a timeshare, more private than a fractional resort property, and costs dramatically less than buying a whole property.Pacaso owners enjoy equitable access to their home and none of the maintenance and management hassles commonly associated with owning a holiday home — all at a fraction of the cost of traditional second home ownership.

Definitely not a timeshare

“Timeshare” is a broad term that refers to any type of property owned and used by multiple people. However, it is commonly associated with buying the right to use an apartment or hotel room in a holiday resort. They work best for people who want a week or fortnight 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 holiday 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 ownership. You may see these marketed as “luxury fractional ownership.” Fractional 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, and they are also costlier than timeshares. Additionally, members must pay expensive 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 space at a club or resort, not a specific property. Pacaso’s limited company co-ownership model builds on the fractional model, as both offer actual property ownership. But a Pacaso is more personal and private in a prime residential location, not a hotel. Every property 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.

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

Co-ownership benefits

Co-ownership downsides

A smarter option

Definitely not a timeshare

Definitely not a fractional

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