The Pacaso model is nothing if not novel. The company buys a home, lightly fixes up and furnishes it, and then creates an LLC with eight ownership stakes. Pacaso customers then purchase at least one-eighth of a share of the home. After that, Pacaso essentially becomes a corporate property manager, handling repairs, cleaning, financing, and scheduling. People who own one-eighth of a Pacaso home can stay up to 44 days a year but no longer than 14 days at a time, and they can sell their share after 12 months. If they do decide to sell, owners independently set the price at which they sell and choose their own real estate agent, though the other owners get to be first in line to buy the share themselves.Got a tip for the reporter of this article? Using a non-work phone or computer, you can contact Maxwell Strachan securely on Signal on 310-614-3752 or email maxwell.strachan@vice.com.
The day that Brad Day, 42, discovered that a tech startup had purchased the home across the street from him in Sonoma, he and the other neighbors gathered to have an emergency meeting. Soon after, they sprang into action, creating anti-Pacaso signs, writing op-eds in the local paper, and talking to members of the city council. They formed an organization, too: "Sonomans Together Opposing Pacaso," or STOP. Like others in Sonoma and elsewhere, Day fears that the entrance of a company like Pacaso into areas zoned for single families will mean less real estate for potential full-time residents."They're corporatizing our community," Day said. "If this business model succeeds, then our town starts to become more and more like an adult Disneyland.""They're corporatizing our community. If this business model succeeds, then our town starts to become more and more like an adult Disneyland."
Unsurprisingly, the people at Pacaso believe that all these local residents are looking at the problem the wrong way. The company now argues that it is helping to solve the housing crisis by steering eight potential second-home owners "away from homes critically needed by the local workforce" and toward a single "luxury" home. (For what it’s worth, Zillow lists the typical home value in Malibu as $3,777,824 as of this writing.)“They're aiming at people who want to pretend that they're wealthy. They're gonna rent the lifestyle.”
In response to the St. Helena letter, Pacaso took aggressive action and sued the city. (The lawsuit is still pending, although a judge ruled partially in the city's favor in July.) Because so many cities have timeshare ordinances similar to St. Helena's, both sides seem to understand the stakes of the suit. "If they lose that, that blows up their entire business model," Day said. In Malibu, Ahern and LaBonge have already found life next to a Pacaso home frustrating. The trash cans often don't get taken out, and the house has been left unattended with security gates open for days at a time, LaBonge said. Workers park on their property and leave equipment there too. ("One morning, I open up the garage, and there's a ladder right smack in the middle of my driveway," LaBonge said.) The three homes sit close together along the Pacific Ocean, and Ahern is worried about evidence of a hole in the Pacaso home's seawall."We're all intertwined with each other, and if you have one clunky neighbor, you're screwed," Ahern said. "If their seawall goes, my seawall goes, Bobby's goes, Billy's goes, Hilton's goes, Diane Warren's goes. Everybody goes because it's one contiguous seawall.""I'm worried about family farms coexisting with Pacaso. They are going after single-family homes."
Lim had been renovating the property since he bought it in 2016 and was preparing to start opening it up to friends, and Allison asked him if he’d ever be interested in selling the house to Pacaso and keeping some shares for himself. He was. Since then, some of Lim’s own friends have bought shares in his Pacaso house, and Lim says traveling to his property has become much more relaxing since Pacaso employees took over the day-to-day maintenance. “Normally when I go to a property, I end up working half the time,” said Lim, who also owns a second home in Lake Tahoe. “It's nice to actually be able to go and enjoy the home.”Since Nkem Ogbechie, 42, and his wife closed on a share of Pacaso home in Malibu, they’ve had a positive experience as well, he said. The family’s full-time residence is in Santa Rosa Valley, about 45 minutes from the home in Malibu, and they decided to go in on the property after spending so much time traveling to various California beach towns during the pandemic. He said at least one other family has purchased a share of the home, but they’ve had “no meaningful interaction” with them outside of an introductory call. Cleaners tidy up in-between, and the property manager has been “very responsive.” Ogbechie, who is an executive at a large public biotech company, has also enjoyed spending time with his neighbors, drinking wine, sitting on the beach, and talking about cars, he said. Even still, the neighbors have made clear they’d prefer if a single family lived next door. Grisanti, the Malibu mayor, has also been a real estate broker for over 40 years, and he foresees issues for the company that he expects might make it "doomed to failure." "Partnerships don't tend to work very well, in my experience. There's always somebody who feels that somebody else has taken advantage and used everything up," Grisanti said. He said everyone has gone to a ski rental and found themselves frustrated by how the last tenant left it. (Not everyone has, but the point stands nonetheless.)As with everything else, Pacaso has a response to that. In-between stays, the house is “thoroughly inspected and cleaned, and any maintenance issues are logged and resolved,” Tooze said. To help resolve disputes, Pacaso said it takes care of minor repairs like fixing a dishwasher and otherwise provides oversight. Trying to figure out how the many potential inter-owner dynamics are handled more specifically, I asked the Pacaso spokesperson if an owner was allowed to rearrange the furniture if they so pleased. “Pacaso takes great measures to ensure that each home is professionally appointed with respect to functionality, durability, and design aesthetics,” Tooze replied. “If owners would like to change specific details about the home, such as redecorating, a change in design, or a home upgrade, they collectively vote on whether to make that change.”And how many homes has the world's fastest-growing unicorn filled up entirely so far? "We don't disclose this number, but I can tell you that hundreds of families across the U.S. are enjoying second-home co-ownership thanks to Pacaso," the spokesperson replied."We are not NIMBYs; we are against the idea that they can come in with this idea of their LLC and circumvent our local zoning ordinances."