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What do you think of the pacaso.com business model? You can buy 1/8th ownership of a home. I wonder if the non-wealthy can collaborate to get the same outcome

What do you think of the pacaso.com business model? You can buy 1/8th ownership of a home. I wonder if the non-wealthy can collaborate to get the same outcomes.

fshbbdssbbgdd 5y ago
How much of the value is Pacaso capturing here? The obvious upside to this arrangement is that you can pay 1/8 of the ownership price to have access to a vacation home. There’s another way to get partial access to a vacation home - renting. Pacaso has the advantage of giving you gains from appreciation. But that needs to be compared to the overhead that they are capturing. It’s worth mentioning that Pacaso is a type of time share. The disadvantage of a time share is that you’re stuck with fixed expenses at a vacation spot you may tire of, and where you might not have access at your preferred dates (unlike a wholly-owned property, or random rentals where you can always find something if you’re willing to pay market rate). It would be useful to find out how liquid the market is for resale of Pacaso property shares. Another option is splitting a vacation property with friends or family. It would be easier to ensure that you can access the property on your preferred dates if you’re willing to stay there at the same time as some of your co-owners. You’d also be paying less for management overhead.
- swframe2 5y ago
  I think the real issue is that they pick the home location, so it is not clear if they are picking homes in locations that will experience large price increase or are likely to rent well on airbnb. Still, don't focus on pacaso specifically, I'm not try to push them. I'm more wondering about collaborative investment in general. Is it new? Are there examples where it has worked well? Would you consider it? Basically, the wealthy have an advantage but why wouldn't that create a market that provides the advantages to the non-wealthy?
  - fshbbdssbbgdd 5y ago
    My main skepticism is that these opportunities are marketed as a collaboration for middle-class investors, but they are being organized by a company with information advantages. I’m afraid that they are capturing a bunch of the gains as management overhead and selling off liabilities to the investors with some hidden costs and somehow diluted potential for returns. I have looked closely into some other crowdfunded real estate platforms in the past and I felt that they were using some misleading marketing to hide fees and liabilities. But I haven’t done a deep dive into Pacaso and I don’t want to call any of these out by name because I’m not a lawyer. The main collaborative investments are the equities markets. If you want real estate, there’s REITs. These markets are highly regulated, and the system is built over hundreds of years to protect the interests of billionaire shareholders. As a regular middle-class investor in these markets you benefit from the same protections. On the other hand, equity valuations are inflated so I understand the desire to find another asset class. I’m just skeptical that bundling your investments with a vacation timeshare is necessarily a good idea. A lot of people got screwed doing that in the past. Maybe you are better off investing your money elsewhere and using the returns to rent a vacation home one day at a time.

What do you think of the pacaso.com business model? You can buy 1/8th ownership of a home. I wonder if the non-wealthy can collaborate to get the same outcomes.

fshbbdssbbgdd 5y ago

How much of the value is Pacaso capturing here? The obvious upside to this arrangement is that you can pay 1/8 of the ownership price to have access to a vacation home. There’s another way to get partial access to a vacation home - renting. Pacaso has the advantage of giving you gains from appreciation. But that needs to be compared to the overhead that they are capturing. It’s worth mentioning that Pacaso is a type of time share. The disadvantage of a time share is that you’re stuck with fixed expenses at a vacation spot you may tire of, and where you might not have access at your preferred dates (unlike a wholly-owned property, or random rentals where you can always find something if you’re willing to pay market rate). It would be useful to find out how liquid the market is for resale of Pacaso property shares. Another option is splitting a vacation property with friends or family. It would be easier to ensure that you can access the property on your preferred dates if you’re willing to stay there at the same time as some of your co-owners. You’d also be paying less for management overhead.

swframe2 5y ago
I think the real issue is that they pick the home location, so it is not clear if they are picking homes in locations that will experience large price increase or are likely to rent well on airbnb. Still, don't focus on pacaso specifically, I'm not try to push them. I'm more wondering about collaborative investment in general. Is it new? Are there examples where it has worked well? Would you consider it? Basically, the wealthy have an advantage but why wouldn't that create a market that provides the advantages to the non-wealthy?
- fshbbdssbbgdd 5y ago
  My main skepticism is that these opportunities are marketed as a collaboration for middle-class investors, but they are being organized by a company with information advantages. I’m afraid that they are capturing a bunch of the gains as management overhead and selling off liabilities to the investors with some hidden costs and somehow diluted potential for returns. I have looked closely into some other crowdfunded real estate platforms in the past and I felt that they were using some misleading marketing to hide fees and liabilities. But I haven’t done a deep dive into Pacaso and I don’t want to call any of these out by name because I’m not a lawyer. The main collaborative investments are the equities markets. If you want real estate, there’s REITs. These markets are highly regulated, and the system is built over hundreds of years to protect the interests of billionaire shareholders. As a regular middle-class investor in these markets you benefit from the same protections. On the other hand, equity valuations are inflated so I understand the desire to find another asset class. I’m just skeptical that bundling your investments with a vacation timeshare is necessarily a good idea. A lot of people got screwed doing that in the past. Maybe you are better off investing your money elsewhere and using the returns to rent a vacation home one day at a time.