Wed. Feb 8th, 2023

News

Why buy a whole pizza when you only want a slice? Real-estate tech firm Pacaso has applied that insight to the world of second-home ownership. And it’s now doing business at the Jersey Shore.


Instead of shelling out millions for a choice property on Seven Mile Island, why not spend less than a million to buy a piece of this one instead? You and your co-owners at 2488 Avalon Ave., Avalon, NJ 08202 will be able to schedule time at the Shore using software developed by the seller. | Photographs via Pacaso

Fractional shares have revolutionized the world of stock investing. People who could never dream of owning Berkshire Hathaway st0ck, for instance, can now do so thanks to platforms like Robinhood and Stash that let small investors buy “slices” of a share of stock.

This same concept has now come to the world of luxury second homes. After all, it does make some sense: You wouldn’t buy a whole pizza in order to eat just one slice, so why pay for an entire beachfront mansion at the Shore when you will more than likely spend no more than one month a year in it?

Thanks to a real estate tech company called Pacaso, you can now buy a piece of the Jersey Shore dream to use when you want to take your vacation. You’ll be sharing it with up to seven other owners, so you will have to work out some logistics, but you will save a bundle in the process.

Founded in California — where else? — in 2020 by two former Zillow executives, Pacaso has been buying houses and selling them by the slice in a rapidly expanding number of communities, mostly in popular vacation destinations, since then. And as of today, Pacaso is offering would-be Jersey Shore vacationers the chance to buy one-eighth of this Avalon neotraditional house for sale.

This house is the first house Pacaso is selling by the slice at the Jersey Shore, bringing to more than 40 the number of markets where Pacaso offers fractional-ownership second homes worldwide. Designed by Mark Asher of Asher Slaunwhite Architects, the leading modern-day reinterpreter of the traditional Jersey Shore vernacular, this brand-new house — just finished this year — has six bedrooms, six full bathrooms and two half bathrooms in 4,545 square feet of interior space.

avalon neotraditional house for sale first floor family room

First-floor family room

And it comes completely furnished and outfitted — Pacaso takes care of managing the house for you. Inside, it has a bright and cheery family room on the first floor and a spacious great room on the second, both of which open onto wraparound porches.

pacaso fractional homeownership great room lounge area

Great-room lounge area

The great room contains a lounge area with a wet bar, espresso machine and wine fridge.

avalon neotraditional house for sale kitchen

Kitchen

Next to the lounge is a top-drawer kitchen with a Wolf gas cooktop and oven, a Sub-Zero refrigerator and a large waterfall island with bar seating.

pacaso fractional homeownership dining room

Dining room

Beyond both of these, a dining room opens onto the wraparound porch.

primary bedroom

Primary bedroom

primary-suite den

Primary suite den

The primary suite on the top floor contains a bedroom with a soaring cathedral ceiling at one end, and a private den with its own balcony at the other.

primary bathroom

Primary bathroom

In between lies a luxurious bathroom with stylish modern fittings.

Three more en-suite bedrooms are on the first floor, and two others share the second with the great room. The house also has its own pool and cabana.

And all this will be at your disposal for up to 44 days each year, according to the listing on the Pacaso website.

“We describe it as a platform that empowers people to co-own second homes together,” says Pacaso co-founder and CEO Austin Allison. “Imagine if three or four of your buddies or family members decided to own a house together in your most desirable second-home location. We basically enable that, but we handle all the details.”

Here’s how it works: Pacaso buys the houses using local real estate agents and then transfers the title to a limited liability company. It then sells shares in the LLC representing one-eighth, one-quarter or one-half of the property to buyers. Those buyers, in turn, get, along with their share, the right to use the house for a certain amount of time per year, depending on the size of the fractional share, at their discretion; Pacaso also operates scheduling software that lets the co-owners determine who will be using the house when.

Pacaso found an eager local partner in agent Joseph Butler, Jr., of A. Lewis Purdy Real Estate in Avalon, who handled the sale as Pacaso’s buyer’s agent. “When I saw Pacaso launch in 2020, I contacted them immediately because I knew they would be a perfect fit for the Avalon market and for the New Jersey Shore as a whole,” Butler says in a news release. “Pacaso brings the dream of second-home ownership to so many people, and they make it simple.

“I have so many clients who rent for an extended period of time and would rather own but don’t want to worry about maintenance or upkeep. Pacaso’s hands-on management allows you to relax while on vacation and not have to worry about anything. I am thrilled to introduce New Jersey to co-ownership via Pacaso!”

Pacaso has run into some trouble in some areas in its home base of California with critics who charge that this setup is a way to get around laws banning transient occupancy; the critics claim that this structure is no different from a timeshare. Allison points out several ways in which it does differ. “First, we’re talking about residential single-family homes that are owned by a small group of people, where timeshares tend to be in big commercial projects like hotels and resorts.

“The second big difference is that you’re buying real estate, not time, meaning you and your co-owners own 100 percent of the home.”

In other words, the difference between a timeshare and Pacaso is akin to the difference between a condominium and a co-op. In a condo or timeshare, you own only the unit or block of time (and can often sublet either to someone else). In a co-op, you own a share of the company that owns the property — and your fellow shareholders or the management you install can establish rules that limit what you can do with it (e.g., no renting out the property).

Since co-operative housing ownership is much less common in California than in the Northeast — actually, co-ops predate condos as a form of splitting property ownership among several people — the Californians may be forgiven their worry. But Pacaso spokesperson Chrissy Bruchey says their worries are misplaced. “The Pacaso owners who have chosen to call certain Pacaso destinations home and to make memories with their families there are making a long-term investment in the community,” she says. “They patronize local businesses year-round, and are bound by a code of conduct ensuring responsible use of their home, which includes a prohibition on short-term rentals.”

Of course, Pacaso makes money off this arrangement: the value of all eight shares of this house it’s selling is $7.256 million, a nice return on the $6 million the company paid for it earlier this year. But when you consider that they also manage the house for you afterwards — and that you will be paying only six figures for the ability to enjoy this gorgeous Mark Asher-designed Avalon traditional house for sale when you’re ready to spend time there — surely you wouldn’t begrudge Pacaso its profit.

Besides, if you decide down the road that you actually do want to buy a whole house, you should also make a decent return on investment when you sell your share. Pacaso lets owners sell their shares on its marketplace after one year; it says owners typically can sell for 10 percent more than they paid for their shares.

THE FINE PRINT

BEDS: 6

BATHS: 6 full, 2 half

SQUARE FEET: 4,545

SALE PRICE: $907,000 for a one-eighth share

OTHER STUFF: Yes, you can buy more than one share if you want to; if you think you will want to spend more than 44 days a season at this house, you probably should. And if you use a buyer’s agent, they get the standard industry commission of 3 percent for representing you from Pacaso. The purchase price includes a maintenance fee equal to 12 percent of the share’s value, and Pacaso charges a monthly maintenance fee going forward for its services. The company is also actively testing the waters to gauge interest in fractional second-home ownership in additional markets; it currently has two prospective properties in Rehoboth Beach on its website.

2488 Avalon Ave., Avalon, NJ 08202 [Pacaso]

Updated May 4th, 10:44 a.m., to include information about maintenance fees.