Rent, co-own or buy a whole second home: What’s right for you?

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Amie Fisher

modern exterior home in LA
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Sometimes, you just need to get away. But how often, and for how long? And where do you like to stay? The answers are different for everyone. Maybe you think of time away from home as an opportunity to explore new and unknown destinations. Or perhaps nothing feels more comfortable than returning to a familiar place where you know what to expect, and you don’t have to search for the things you need. Examining your travel preferences and budget can help you choose accommodations that meet your needs. Three housing options to consider are short-term vacation rentals, a whole second home, and a co-owned, professionally managed second home.    Here are five questions to ask yourself when comparing your second home options.

How much will I use the home?

Do you typically take one vacation a year? Or maybe you’re a “snowbird” who likes to split your time between warmer and cooler locations. Perhaps you enjoy a regular change of scenery and don’t mind combining work and leisure time. Annual vacationers: A vacation rental is a good option if you typically take one annual trip and occasional weekend jaunts. The pay-as-you-go model works well for infrequent travelers. Multi-month, split-residence owners: A whole second home gives you maximum flexibility and is a good choice for people who plan to stay in a second home for several consecutive months each year.Multi-week or work-and-leisure travelers: Co-ownership is a great choice. You can purchase the amount of ownership you’ll use based on your usage preferences. For example, a ⅛ share of a Pacaso gives you up to 44 nights at your home that you can use throughout the year. 

Do I plan ahead?

Do you sometimes wake up on a Saturday morning, hop in the car and figure you’ll find a place to stay once you reach your destination? Or are you most comfortable making plans weeks or months in advance?Get-up-and-goers: If spontaneity is your jam or commitments make planning ahead difficult, whole home ownership might be the right choice. The home is all yours, so you can show up anytime. Moderate to master planners: If you’re able to plan ahead just a little, both vacation rentals and co-ownership are good options, but they offer different levels of flexibility. Rentals can be booked by anyone — hundreds of people may be competing for dates at any given time — so the most desirable dates have limited availability. Scheduling and cancellation rules vary, and your experience at any particular rental is unpredictable; you have to be comfortable with some unknowns when choosing a rental.When you co-own a Pacaso, a maximum of seven other owners enjoy the home, meaning far less competition for dates. Plus, the SmartStay™ scheduling system makes booking stays easy and equitable for all owners. Planners can book stays up to two years in advance, and those who prefer more spontaneity can take advantage of short-notice stays just two days in advance.  

Am I looking for a ‘home away from home’?

Are you just looking for a comfortable place to sleep? Do you think of a second home as a blank slate, ready for your artistic vision? Or do you want an always-ready gathering place where you make memories with family and friends?Sightseers: If you don't plan to spend much time in the home — you’d rather be at the beach or on the ski slopes — consider a vacation rental. Rentals vary in the amenities they offer, so you can’t always count on a fully stocked kitchen or the softest towels, but most are suitable as a place to spend a few nights. Customizers: Let’s say you’ve always dreamed of a beach house with a nautical theme — you’ve been collecting shells for years, and you’ve found the perfect monogrammed welcome sign on Etsy — then a whole second home is what you’re after. You can decorate and furnish it to suit your personality, and it can be “the family vacation home” for generations.  Comfort-seekers: How about a bit of both? When you co-own a Pacaso, you are a true owner of a modern and beautifully designed home, but you don’t have the responsibilities of upkeep. Each owner also has a secured space for personal belongings (even your seashells!), so it’s easy to just show up and relax, knowing everything you need is there.   

Am I willing to spend time on homeowner tasks?

Do you get excited about home improvement projects and bill-payment spreadsheets? Or, when you’re away from home, are utilities and lawn care the last things you want to think about?HGTV enthusiasts: If you’re handy (or have a reliable network of handy people) and get satisfaction from the effort you put into your home, whole second home ownership might be a good fit. You control what gets done, on what schedule, and you can use your skills to maintain the home (potentially saving money, in exchange for your time).Vacationers: If you’re traveling with a vacation mindset, a trip to the hardware store is not on your agenda. Go with a vacation rental, and if the faucet drips, no worries. You’re only there for a few days.Time-preservers: If you’re looking for true ownership, but you want to maximize your time and enjoyment of your second home, professionally managed co-ownership is ideal. Pacaso handles maintenance, repairs, property management, bill payment and more. Operating costs are passed through to owners with no markup, and Pacaso charges a fixed $99 monthly management fee per share for its services. 

What’s my budget?

Money will likely be an important factor in your decision. The upfront costs associated with a home purchase are much higher than a rental, but if you use the home often, ownership can offer many benefits. Notably, ownership of a whole home or a Pacaso is true real estate ownership, and any equity gains realized are yours.No big purchases, please: If saving for a second home isn’t part of your financial plan, paying nightly for vacation rentals is a fine alternative. Just keep in mind how often you travel, and recognize that you generally pay a premium when you compare the per-day cost of a rental to an owned home. The sky’s the limit: Great! You can buy a whole second home of your choice. Realistically, however, most people who budget for a whole second home are looking at mid-tier homes which may be in short supply (especially in popular second home locations). If a whole home is the best fit for your needs, be prepared for more competition and more compromises. I want more for less: You got it! Co-ownership boosts your purchasing power, enabling you to buy a higher-end home for a mid-tier price. With ownership starting at ⅛, you can co-own a luxury $2 million Pacaso for just $250,000.There’s no one right choice for everyone. But if you plan to use your second home several weeks a year, you don’t want the hassles and responsibilities of whole home ownership, and you want your second home budget to go further, Pacaso is a great option. 

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