Want to Own (Part) of a Vacation Home? Hollywood’s Wealthy Seem More Open to It

At the upper echelon of the real estate market, high interest rates and taxes are driving a trend of fractional ownership of second, third or fourth homes to add more bang for the buck.

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“Fractional ownership happens more often than you’d think would make sense with the uber-wealthy,” Million Dollar Listing star Josh Altman of The Altman Group tells The Hollywood Reporte r. “It’s a money play. Maybe one of them didn’t want to drop $108 million, even though they could any Tuesday of the year and not even care. It’s a way to make your money go further.”

Former Million Dollar Listing San Francisco cast member Roh Habibi of Sotheby’s International Realty often brokers co-ownership deals: “That happens a lot in Hawaii, actually, where two prominent families — founders of companies or C-suite executives — co-buy because they know they will not be able to use this thing, but it’s a good place to park their money as a tangible asset. It’s a purchase that is totally legacy and multi-generational to have in the families a long time.”

Chef-hotelier Charlie Palmer, music industry execs, Hollywood producers, and retired NFL and NBA players are among those doing business with San Francisco-based company Pacaso , which has tapped into home co-ownership demand with a model that allows for more time in vacation mode by taking hassles like maintenance and repair off the table.

Pacaso offers an anonymous co-purchase of a one-eighth share (individuals can buy up to four shares or one-half) of a fully-furnished vacation estate and handles the legal and financing process, stay scheduling, cleaning, property management, taxes, insurance and details like utility bills. Shares range from $200,000 up to $2.8 million (for an estimated home value of $1.6 million to nearly $23 million) with the average transaction at a sweet spot of $500,000 to $600,000.

A “swap” feature, introduced last year, allows co-owners to trade dates with co-owners of the home or with friends who have shares in other Pacaso properties, providing access to multiple homes. Similar to home ownership, Pacaso shares can be resold at market value (the average is a 10 percent gain); many have wait lists.

Co-founded by former Zillow execs Austin Allison and Spencer Rascoff in 2020 on the premise of making vacation home ownership more accessible, Pacaso has grown into the upper rungs of the market and expanded to more than 40 U.S. cities and into Cabo, Paris (where chef Palmer has a home share) and London with plans to add additional international listings. The Pacaso Estate collection lists homes greater than $1 million per one-eighth ownership in lucrative markets such as Napa , Malibu , Cape Cod , Park City, London , Montecito and Vail. In March, the company added third-party listings in the United States on its marketplace that the company will purchase, given enough buyer interest. Maveron, co-founded by former Starbucks CEO Howard Schultz and Dan Levitan, was the lead investor in Pacaso.

Sales of second homes valued at more than $1 million increased in the U.S. in multiple markets in 2023, topped off by the counties that are home to Newport, Rhode Island and Daytona Beach, Florida, according to an annual market analysis by Pacaso of year-over-year growth in closed transactions of second homes.

“I love to spend time in Paris, Barcelona and other ‘food cities’ in Europe,” chef Palmer tells THR. “When this [Pacaso] property became available in Paris, I was impressed; it’s in the exact location where I like to stay on the Left Bank on Rue du Bac. Hotel rates are crazy — $3,000-$5,000 a night — at the place I love; if you are there 10 days, it’s a chunk of money. I’m fortunate because I know five of the eight co-owners well. We all jumped on this and decided to buy a piece six months ago. One of the main guys co-founded the [Wing and Barrel Ranch] hunting club with me in Sonoma and the other four are members.”

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“From a financial standpoint, it makes a lot of sense,” continues Palmer, “because the reality is that, if you own a home in Paris, you’re not going to use it that much. I had a house in the Hamptons for 15 years, and I probably spent two months of the year there, so it’s kind of a waste. Even with one-eighth, it’s 40-some days a year, but kids and friends can use it. Pacaso handles everything; they even have a concierge. I’m in the hotel business, so for me it’s that care to make it seamless. If I get sick of owning a share, I can sell it. I know people who own shares in Pacaso homes in two or three different destinations now.” (Palmer’s restaurant group has locations in New York, Napa Valley, Washington and Reno, Nevada, and Pacaso has home share opportunities in the latter three of those locations.)

Pacaso co-founder Allison began selling real estate when he was 18 years old and sold his real estate tech company to Zillow in 2015. He was inspired to launch Pacaso after purchasing a Lake Tahoe vacation home and tells THR that he has noticed the emerging trend of “multi-destination co-ownership.”  He says that “the benefit is it enables you to have a happy place in more than one place. Second homes are life-enriching yet highly underutilized. The average second home is only used five weeks per year. So Pacaso takes aspiring home owners and connects them with empty second homes in the same way that Airbnb connects aspiring travelers with empty bedrooms. Even if you can afford a home that’s going to sit empty for 11 months of the year, it’s a huge hassle and quite wasteful. We are consolidating demand into fewer, super-luxury homes. In the second home market, you often have snow or desert conditions that create wear and tear and challenges finding specialty labor. We handle every detail. It’s analogous to why wealthy people use NetJets, the leading provider of co-owned planes, when they could afford their own plane. You have newer aircraft, the most qualified pilots, fleet availability, which gives you faster access to lots of destinations. It’s a seamless, high-end experience.”

Pacaso recently purchased a six-bedroom waterfront villa in Cabo from The Oppenheim Group, within the gated Miramar community, and it quickly sold its eight shares. The Altman Brothers have likewise located luxury homes for Pacaso, such as a seven-bedroom Malibu estate and a Napa Valley home featured on Million Dollar Listing Los Angeles in 2022 that Josh Altman also placed an entertainment industry writer in for a one-eighth share.

“It’s funny, because my Napa client sees the new Pacaso listings and says, ‘Maybe we’ll do this one, too, as it’s in a totally different area,'” says Altman. “So it’s opening their mind to the possibility of having multiple second, third, fourth vacation homes at an eighth of the price.”

Habibi recently helped a client buy a $1 million share of a Pacaso waterfront Balboa Island property and placed an NFL player in another Pacaso. “The shelf-life for a second or third home is very short, like 24 months,” he tells THR . “People are busy running their own little empires. I have a client with a primary home on Mercer Island in Seattle who bought a $9 million home in Aspen. She called me and said, ‘Roh, we’ve had this thing for three years and we’ve been there twice!’ I was like, ‘Oh my God, you’ve been paying three years of holding costs on a super-luxury home that you never use. So they sold that home and we’ve been hunting a Pacaso, so she could get the same level of home — four or five bedrooms — on a beautiful lot in the most desired area and only buy a share to use for 44 days a year. This frees you up to not have to always go to a second home in a specific destination because you’re paying a boatload for it; you still have a big budget to travel and experience new places.”

Ryan Serhant, the former Million Dollar Listing New York star on THR ‘s 2024 Top New York Real Estate Agents list and currently showcased in Netflix’s Owning Manhattan that debuted on June 28, agrees in the financial efficiency offered by a fractional purchase. “We have some clients who want a quality of life that they can’t necessarily afford all at once, especially with a secondary home, and you’re not going to be there all the time anyway, so why are you spending all this money for a home that’s mostly going to remain vacant? When you do the math, what’s the cost per day that you’re using it? That’s what pushes fractional ownership. People don’t like renting and you can’t leave your stuff in hotels. Calculate how much money you’ve spent on hotels and on Airbnb or renting, over time. When you add it all together, it could be $500,000 or $1 million dollars just gone, flushed down the drain, versus turning that into an investment. So fractional ownership makes sense if there’s a place you love vacationing and you’re going to go there for the next 10 years anyway.”

Michael Evans, an estates agent with Carolwood Estates, has noticed interest in Pacaso growing in upscale destination markets, from buyers and sellers. “I have two clients who are considering working with Pacaso,” he tells THR. “One couple — the husband is an actor-producer — owns a Malibu property, valued around $9 million, that they rarely use and are reluctantly open to selling. The Pacaso benefit is they are able to retain some ownership for sentimental value. Pacaso would allow them to own up to 50 percent of the property, once the sale fees have been met. This allows them to reinvest those funds and still enjoy the Malibu lifestyle for the majority of the year. My buyer clients, another couple, are looking at a Vail purchase to complement their Palisades residence. We have a budget around $1.5 million for their one-eighth ownership. They like the equity gains, with less cash commitment to buying outright, as it will be a third home for vacations. Plus, it’s fully managed in their absence. The bonus for me is I still receive my full three percent compensation, while representing them out of state.”

While Pacaso commands the home co-ownership market at scale (boasting more than $1 billion-worth in cumulative revenue of real estate in its portfolio), smaller U.S. companies offering fractional co-ownership of luxury vacation properties include Colorado-based Lifestyle Asset Group (with properties in the U.S. and Mexico) and Utah-based Ember (with listings in Utah, California and Florida). Among the European companies in the business are U.K.-based Fractional Group , Paris-based Lazazu and Berlin-based MYNE .

Then there are companies, such as Nashville-based ThirdHome , specializing in luxury vacation home exchanges, which Habibi likens to the plot of the 2006 Nancy Meyers’ film The Holiday. That offers the investment payout out of a Hollywood plot line — an idyllic vacation ending in romance.

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