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Second home real estate booms amid covid-19

Austin Allison, Pacaso CEO, joins Yahoo Finance to discuss the second home real estate booms amid covid-19.

Video Transcript

ADAM SHAPIRO: There is a better way to buy and own a second home, and who best to discuss that than the CEO of Pacaso? They make that possibility happen for a lot of people. And we welcome into the stream Austin Allison, the CEO of Pacaso. Thank you for being here.

You modernized the way that some of us who dream of owning a second home can actually make that happen. And I never would have considered this, but go to the website, set up an LLC, bring in other people for kind of co-ownership. Tell us more about this because it seemed like a dream out of reach for many of us.

AUSTIN ALLISON: Yeah, so good news, Adam. There is a better way to own a second home. So Pacaso exists to do just that. In short, it's co-ownership. It's professionally managed. With Pacaso, we empower families to buy a portion of a second home and enjoy true ownership benefits but for way less cost and hassle.

So the reason why we exist is because most second homes are underutilized. The typical second home sits vacant for 10 to 11 months a year. Meanwhile, on the demand side, there are millions of families who aspire to own second homes.

We recently published a survey, a second-home sentiment survey, that reported that about 56% of families with over 156-- or $150,000 in household income aspire to own a second home, but unfortunately the second-home ownership dream is out of reach today for all but the top 1%, and Pacaso exists to change that. We want to make second homeownership possible for the top 15% or 20% of the world.

JULIA LA ROCHE: Austin, if I'm seeing this correctly, it looks like you all launched this year, so in the middle of a pandemic. And, of course, we've seen, I guess when you look at the housing market, it's been quite robust even during the worst days of COVID. I am interested in this business-- and obviously you've been in real estate for a long time-- and understanding exactly the pain point.

And kind of make it really tangible for us because, you know, you might have a dream of owning a second home, but then it's like, well, do I want to share with a bunch of people? I might not like their aesthetic or I might feel like they they're taking too many weeks or something. Walk us through the process.

AUSTIN ALLISON: Yeah, you bet. So first I'll speak to the pandemic point, which is second-home ownership-- there's never been more interest for second-home ownership. And I think that's been fueled by the pandemic because more families now have the freedom to rethink how and where they live and work, and therefore second-home ownership is top of mind because we want a place to retreat, to feel safe, to recharge our batteries and disconnect. So the timing is perfect for Pacaso and for second-home ownership at large.

However, for most people, prior to Pacaso, the only real way to own a second home was to either buy the whole home or rent a home for a portion of time. And if you're just using a home for, say, one week a year or one visit per year, there's a lot of great solutions for that, Airbnb and Vrbo being the top two that come to mind, versus if you're looking to occupy a home more than six months, a year, whole-home ownership provides a good solution for that.

Pacaso exists to solve the problem in the middle, which is for people who aspire to use the home more than once per year but less than six months per year. And with our model, you're able to right size your ownership and only buy the amount of the home that you actually plan to use.

So the way that it works is you can either visit our website at Pacaso.com and see active listings or bring us listings that may not be on our website. You can find homes on Redfin or Zillow or Realtor.com and bring them to Pacaso, and we will help you to own a portion of that home.

Every home is owned in a property-specific LLC, and Pacaso manages every detail from paying the bills to handling the furnishings and repairs and maintenance all the way through to providing innovative software that enables people to share the calendar in a fair--


AUSTIN ALLISON: --and equitable way.

ADAM SHAPIRO: Austin, I would assume-- and correct me-- that you also do the financing because a lot of people where you get a problem with getting a second home is if you're going to finance it, the interest rate's higher. You have to have the larger down payment. The banks won't lend in some cases. So are you all in one, and how big is that market going to be for you?

AUSTIN ALLISON: Yeah, so we partner with leading banks. Our largest financial partner is First Republic Bank. And we offer 50% financing at really competitive terms for anybody who purchases a Pacaso.

And Pacaso shares are going to range anywhere from $50,000 to purchase a share on the low end to we have some shares that are as much as a million dollars. So the range of homes that you can purchase through Pacaso is quite broad, and anybody who purchases a share can benefit from our 50% turnkey financing, and we do manage all of those details.

ADAM SHAPIRO: Austin is the co-founder and CEO of Pacaso, and we appreciate your joining us.