The Future of Second Home Ownership

In this episode of the Top of Mind podcast, Mike Simonsen sits down with Austin Allison, CEO of Pacaso Homes, to talk about the shifting dynamics in the market for second homes. Austin gives an overview of Pacaso’s innovative model for second home ownership, outlines the surprising community benefits of shared second homes, shares key considerations for people thinking about second homes as an investment, and more.

About Austin Allison

Austin Allison co-founded Pacaso to make the dream of second-home ownership a reality for more people after experiencing the profound effect it had on his own life.

Pacaso is Austin’s second startup. In 2009, he founded dotloop in his hometown of Cincinnati, a company that created software to seamlessly manage real estate transactions. Zillow acquired dotloop in 2015, and Austin continued to run dotloop as a Zillow executive until 2018. Austin started selling real estate at the age of 18 and worked in residential and commercial real estate for a decade.

 

Here’s a glimpse of what you’ll learn: 

• A look at Pacaso’s innovative model for second-home ownership
• The ways in which shared vacation homes have similar benefits to carpooling
• Why Pacaso’s second homes are almost fully utilized, while single-owner second homes only get used five to six weeks per year
• Why the inventory shortage — especially in second-home markets — is here to stay
• How redirecting second-home demand frees up inventory for local primary home buyers

Resources mentioned in this episode:

• Austin Allison on LinkedIn
• Austin Allison on Twitter
• Pacaso
• Mike Simonsen on LinkedIn
• Altos Research

Brought to you by...

This episode is brought to you by Altos Research. Altos is the #1 market data company for realtors, title, and escrow. 

Each week, Altos Research tracks every home for sale in the country, all the pricing, and all the changes in pricing, and synthesizes those analytics to make them available before becoming visible through traditional channels.

Altos Research is a full-featured lead conversion engine. Our system uses real-time market reports to attract and engage prospective buyers and sellers. Designed to work with minimal setup, Altos helps you move leads through the funnel automatically, alerting you when they're ready to take action.

Schedule a demo to see Altos in action. You can also get a copy of our free eBook: How To Use Market Data to Build Your Real Estate Business.

Visit Altos Research at altosresearch.com for more information or set up a call with us here.

Episode Transcript

Intro  0:02  

Welcome to Top of Mind, the show where we talk to real estate industry insiders and experts about the biggest trends impacting the market today. Enjoy the show.

Mike Simonsen  0:13  

Mike Simonsen here. Thanks for joining me today. Welcome to the Top of Mind podcast. This is where I talk to the smartest leaders, thinkers and doers in the real estate industry. For a couple of years now, we've been sharing our latest market data every week in our weekly video series. With a new Top of Mind podcast, we're looking to add some context to the discussion about what's happening in the market from leaders in the industry. Each week, altos research tracks every home for sale in the country. All the pricing, supply and demand, we analyse all that data and we make it available to you before you see it in the traditional channels. People desperately need to know what's happening in the housing market right now. It's been so hot, so competitive, and suddenly maybe the landscape is changing. So when people ask me, Mike, can I get the data from my local market? The answer is yes. Visit altosresearch.com for a free consultation on and how you can use market data in your business with your buyers and sellers right now. So without further ado, let me introduce my guests today. I'm thrilled to have Austin Allison. Austin co founded Pacaso to make the dream of second home ownership a reality for more people. Pacaso is Boston second startup in 2009. He founded dotloop, a company that created software to seamlessly manage real estate transactions. Zillow acquired dotloop in 2015. And Austin continued to run dot loop as Zillow executive until 2018. Austin started selling real estate at the age of 18, and worked in residential and commercial real estate for a decade. And I remember some of the very early dotloop conversations we had Austin a long time ago, 14 15 years ago. So welcome. I'm glad to have you on the Top of Mind podcast.

Austin Allison  2:10  

Thank you so much, Mike. It's really great to be here. And good to see you again.

Mike Simonsen  2:14  

Nice to see you. Okay, so for for the listeners who don't know, Pacaso homes, once you give them up. Yeah, absolutely.

Austin Allison  2:21  

So Pacaso provides a service that enables people to own a second home for 1/8 the cost. And we do that through this this category that we're kind of pioneering that we described as CO ownership, which basically means that a small group of people can co own a home together, except for Pacaso manages the entire experience. So the easiest way to get your mind around it, Mike is imagine if you and three or four of your best friends or family members decided that you wanted to own a home somewhere, you could go do this on your own, you could form your own LLC, you could find the home, you could buy it, hire a property manager, that's essentially how Pacaso works except for we sort of handle all the details from start to finish. So it just makes the CO ownership experience easier and more seamless for for all the parties involved. And the reason why we created the company is to make the second homeownership accessible for more people. You know, I grew up in a small town north of Cincinnati, Ohio, my dad was a carpenter, and we live paycheck to paycheck. And I mentioned that because I was like most families who didn't have a second home, I just dreamed of owning a second home. And along the way, when my wife and I, my wife, Angela, and I were able to become second homeowners, it just totally, you know enriched our lives, that privilege of being able to own a home in and of itself is a is a massive opportunity and a gift. But to be able to own a second home is is is you know, it's life changing. And I wanted to find a way to make that possible for more people.

Mike Simonsen  3:57  

That's great. I totally get it. And I've seen so so you said one eight. So you're going in with eight people. Yeah,

Austin Allison  4:06  

so you can buy a minimum of one eight. But many people will buy more than that. Right? It depends on how often you plan to use your second home. Now, the reason why we start with 1/8 is that's about how much the typical second homeowner uses their home. So in independent of CO ownership, if you were to just serve a whole second homeowners, what you'll find is that the average second home is used about five or six weeks per year, which is about 1/8 of the time. So that's our sort of entry point. But if you plan to or have the means and ability to use second home more than that, you can buy more. You know, I just talked to one of one of our clients a couple of weeks ago I was looking at our our sales reports and I noticed that the same person bought four different Pacaso's in four different locations all in the same week. And I'm like wow, you know, we don't see that we do see people buy multiple fairly Often, but it's rare to see somebody buy four separate units and four homes in the same week. So I picked up the phone and I call this individual and he's a family in Chicago and him and his family wanted to get out of the Chicago winters where it's cold and windy. And but they couldn't, you know, justify owning a home that they would only use, you know, less than half the time. So they use Pacaso to be able to own a couple of different homes and really live that, that that second home life be part of a second community meet a second group of friends, but without the overhead and, and, and expense and hassle associated with whole homeownership. It just, it's hard. Unless you're going to use the home more than six months a year, it's really hard to justify owning all of it. And then it's also wasteful. You know, every home that's sitting empty is, is bad for the environment. It's bad for the community, it drives up home prices, because that's that it further constrains supply. So we're just focused on helping people make better use of homes, and in a more sustainable way. And it has the effect of making it accessible to more people.

Mike Simonsen  6:07  

That's really cool. And I'm very interested in the efficiency part of that discussion. So you said that the typical second home is six weeks here. Is your six weeks here, five or six weeks here. Have you observed? So part of that is that it's Christmas, it's spring break week that some of those Fourth of July week are the big weeks. Have you observed that with Pacaso the homes are used 90% of the year or something like that, can you actually measure utilization density going up?

Austin Allison  6:39  

Yeah, absolutely. And just to clarify one thing for some people, Fourth of July, and Christmas or New Year's, you know, are the big dates, but not for everyone. You know, I use my wife and I as an example, the two biggest weeks in Lake Tahoe are Fourth of July and New Years. I mean, there are no homes or hotels available on those two weeks. It's fully occupied every single year. But my wife and I have never been to Lake Tahoe, we've all been there since you know 2013. And we've never been to Lake Tahoe on on Christmas or Fourth of July that I can remember. Nor do we intend to go there on those holidays. That's just not our thing. We prefer to be there in the shoulder season, right, where there's less traffic, you know, shorter lines, we can get into restaurants without having reservations and stuff like that. So everybody travels a little bit differently. And the more diverse the group of owners is in a particular home, the less travel conflict you have, right out of the gate, you ended up getting some people that like the winter some people that like the summer, some people that like the shoulder season, some people that like the peak, you know, some people don't celebrate, you know, Christmas other people do. So the more diversity you have in the ownership group, the less conflict there is right out of the gate. But to answer the other part of your question around utilization, you know, our homes are highly utilized once once a home gets gets put into service, meaning once it's fully sold, they're utilized just under 90% of the time, which is incredible. I mean, that's six to seven times as much as a normal second home. And it really occupies like a primary home where the people or the owners are using the home year round. And there's a couple of reasons why that's important. You know, one is, is the accessibility that we talked about before, like when you're only buying an eighth or a quarter of the home, it lowers the price of entry and also the operating costs. But the other big benefit is that, you know, one of the one of the big problems for second home destinations is that during the shoulder season, the local economy really struggles, the local bars, coffee shops, markets, you know, the the ski resorts, the bicycle shops, whatever the case may be, you know, those businesses really struggle during the shoulder season, when people aren't there to support the businesses year round. Pacaso owners support businesses year round, right. And that is a really, really important piece because when you're supporting the local coffee shop, that local coffee shop can employ a barista and that barista can, you know spend money and other businesses or hire babysitters and that's really what makes the economic cycle turn in an economy and a local economy and having homes utilized by owners is one of the best things that you can do to keep the local economy healthy. The other reason why it's really important, Mike is you know, you you know about housing data, you know, as good or better than than anyone in our industry. So you know very well but, you know, we're in the middle of a housing crisis in most markets right now and affordability crisis where home prices have appreciated at a level and continue to appreciate it levels that are unsustainable. So if you're a, you know, a primary like a local worker that that is true trying to buy a primary home in one of these markets, it's almost impossible to be able to afford a home. And one of the reasons why it's so difficult to afford a home is you have second home cash buyers coming into these towns, buying median price homes, taking away more supply from the local workforce, driving up houses even further. Pacaso has the effect of actually alleviating that pressure. Because we're empowering people who would have bought a five or $600,000 home to buy a four or $5 million home with Pacaso. So we're actually redirecting demand away from the middle medium tier into the luxury tier, alleviating pressure at on the you know, on that that median price tier, which is really good for everyone. So long winded way of saying, yes, these homes occupy like primary homes, not like typical secondary homes. And that's good for everybody, it's good for the environment, it's good for the community. And it's, it's good for housing affordability.

Mike Simonsen  10:59  

So lots to unpack there. Let's start with the fact that you know, your kid is only a year or two old, you've got to in a few years, you're gonna have about a 15 year window, when you're only vacation time or the RPK then you're gonna switch into that mode. And then but but you know, you and the dog and the kid are gonna go, you're like, well, we could get out for this spring break week. Let's go. So so. So that's so I love that you know, where you have eight buyers who are going to buy in Tahoe or buy it, they were going to buy their houses in Napa. And now they can buy one house and leave the the more common space open, right? Tell me about how, when we're buying when people are buying a home together? There's all kinds of, you know, nuances to that. Do I come with my seven friends? Or like how do we get to that diversity? How does that typically work?

Austin Allison  11:57  

So you absolutely can come with your, you know, seven friends or fewer. If you all want to own more than an eighth, absolutely, we'd help you with that. But most of the time, it doesn't work that way. Most of the time, you might have one or two owners, or maybe two or three, I guess you can have one owner that knows him or herself. But it's not uncommon to see two or three owners that know each other in a home. But you know, oftentimes there's people who are meeting through Pacaso, right, where Pacaso is part of the service that we're providing is enabling people to connect, right we're we're sort of aggregating demand, I guess, is one way to think about it by making this service available. So you don't have to self organize and know the other owners to get onto the platform. And the service that we're providing is encompassing, of really all aspects of of managing and operating home, everything from designing the property to repairing things when they break to even paying bills on behalf of owners so that as an owner, you just get to show up at your home. Enjoy the home. And when you leave, you don't have to worry about you know, all the other hassles and headaches that are customary of homeownership

Mike Simonsen  13:10  

water heaters going out or whatever. Exactly.

Austin Allison  13:13  

Yeah, exactly. So so we pretty much handle everything soup to nuts, what I forgot, what was the other part of your question, I lost my train of thought. So

Mike Simonsen  13:21  

I'm thinking about, like, you know, so now we bought, and we've got questions and things about, like, you know, about, I'm interested in the liquidity so like, ah, yeah, how do you buy? How do you sell? Is that what has ended up working out? Yeah, so

Austin Allison  13:37  

I mean, the it pretty much transacts just like a normal, you know, home. I mean, there's, there's only one difference, which is that the other owners have a right of first refusal for when you go to sell. But Pacaso is is effectively like the property manager that's facilitating this experience. And we work with with we try to work with real estate agents on every transaction that we can, you know, sometimes buyers will come unrepresented by agents, but but, you know, often oftentimes they they come represented by agents, and we pay full commissions. You know, even in markets where the standard Co Op commission is only two or two and a half percent, we always pay a full 3%. And we make the process very easy. For our real estate agent partners, we try to make it as easy as a referral. So any extra, you know, questions or work related to the CO ownership model, we handle that on behalf of our agent partners. So we make it really easy and it transacts just like a normal home. So as a as an owner of a of a Pacaso. Let's say you bought your Pacaso for $500,000. And then a year from now you decide you want to sell you just pick your price. I mean, we'll provide guidance on what we think it's worth. But ultimately, just like a normal home listing, you pick your price And if there's support for that price in the market, you know, you can sell. But ultimately, if there's not support for that price in the market, then then you'll you'll have to adjust your price. But so far all any of the resales that have happened through Pacaso have resold in less than 10 days for greater than 15% more than what they paid a year prior. So it pretty much tracks the underlying real estate. And again, the only difference is that the other owners in the ownership group have a right to buy the before it goes to the open market. And so then

Mike Simonsen  15:34  

I just listed with a realtor like I would listen to

Austin Allison  15:39  

you live with Pacaso. Yeah, exactly.

Mike Simonsen  15:42  

And but I've listed my one a share on Pacaso my Pacaso share on Pacaso.

Austin Allison  15:47  

Yep. And that's great. You know, we're we're, we participate in the MLS just like everybody else. So the units get syndicated to all the other you know, real estate websites and the portals and all that good stuff.

Mike Simonsen  15:58  

Yeah. Cool. Do you do Oh, I lost my question. On the the so we're selling them and listing them on the on Pacaso. Man, I kept I had a good heavens, next follow up, I was thinking, Okay, well, let's talk about a row. The the let's talk about that you talked mentioned, like $5 million homes? Yeah, like four or $5 million homes? Is that what you're buying? Oh, I know what the question was, the question was, is Pacaso ever taking capital risk? Or is Pacaso ever buying a chunk of these homes, because we've got three buyers, but we don't have the other five yet.

Austin Allison  16:33  

Yeah, that and that's an important part of the service that we're providing, you know, like, if, if, if you and two of your friends weren't wanted to do this on your own and find some other buyers, like, there's a lot of things that need to come together, you know, to sort of make the process seamless. So you know, one of those things is securing the property and furnishing it and designing it and all that stuff. And we handle all that. And we do buy that now, generally, the property will be pre sold to some level before we ended up closing. And then we hold a portion of the property for a period of time as we're selling through the remaining interests. And then once you once the property is fully sold through, we retain no ownership, you and your small group of owners, you know, you could have as little as two owners in a home in scenarios where two people by 50%, or as many as eight owners in a home, you know, typically we'll see, you know, five or six because a couple of people will buy a quarter. But once the home is fully syndicated, the owners own 100% of the property. And Pacaso is just a property manager.

Mike Simonsen  17:37  

And so Okay, so now let's shift into the the four or 5 million bucks is that the price range that we're doing, I suppose for second homes, if I was going to be buying a $500,000 second home and in a beach town in Florida or someplace that I and I'm buying 1/8 of a bigger house, I'm buying 4 million is that? Is that how you guys think about it?

Austin Allison  18:00  

Yeah, our sweetspot today is is four to 5 million for the home price for sure. Call it four to 6 million, I would say and but it varies by market. So the way to think about it is a multiple on median price. So we're typically two to four times the median price in a market. We're not buying medium priced homes, you know, we're not can be competing with the local school teacher. You know, for homes, we're always buying luxury homes, but the price point aligns with the market like where I'm at right now. I'm in Scottsdale, you know, I don't know what the median is here. But I'm guessing the medians, you know, probably five or $600,000. So in Scottsdale, our price point might be assuming the median is five or $600,000. Our range would be caught 1.2 to, you know, three or 4 million at the high end. Whereas other markets like fitted prices, the median price in Scottsdale is 1.6 million. Is it really?

Mike Simonsen  18:59  

Yeah, right now.

Austin Allison  19:00  

Wow. Oh, okay. I didn't realise prices have gone up that much in Scottsdale. Wow. Well, I'm glad I'm talking to a real estate expert. Really? What point six? No, that can't be across. Yeah.

Mike Simonsen  19:11  

Yep. Wow,

Austin Allison  19:15  

that's insane. You know, we're the big number.

Mike Simonsen  19:18  

It's a big number. And and, you know, there's a lot fewer on the market than they're usually starting to climb at. And then Phoenix and Phoenix. Yeah, let's look.

Austin Allison  19:28  

That's why I was thinking I think about Scottsdale and Phoenix is one market similar.

Mike Simonsen  19:32  

They're very different, right? But so Scottsdale or Phoenix is is 540.

Austin Allison  19:37  

Yeah, that's what I would have guessed. Okay. So anyway, in a market like Phoenix, our range should be you know, one point something to maybe 3 million, but in a market like Scottsdale, right where the median is 1.5. We're going to be 3 million bucks. And above you know, like first house we brought out in Scottsdale was $4 million as an example. So It's always a multiple of the median price in the market. And it's always luxury, you know, in that market. Yeah,

Mike Simonsen  20:07  

that's interesting. Okay, so always luxury. So it is luxury second homes, but but like being more accessible?

Austin Allison  20:16  

Yeah, yeah. And the reason you I mean, there's a few reasons why we care so much about the luxury price point. I mean, one is we just care a lot about, you know, society, we care a lot about community, we care a lot about housing affordability. And, you know, it wouldn't be I don't think it would be good for the world. If we were competing, you know, with with school teachers for median priced homes, you know, that would, that would contribute to housing, the housing affordability crisis in a negative way, in my opinion, but when you can redirect demand this luxury demand into a different tier, you know, I'm a little less worried about driving up the price of $4 million homes, you know what I mean? Like, if, if you have the means to buy a $4 million home, like if prices are appreciated at that level, like, sorry, about your luck, I'm much more concerned about protecting the median price tier to ensure that people who need primary homes have a shot, you know, getting their primary home, as opposed to what's happening today, where they're competing with all the second home cash buyer. But the second reason why, you know, our business model is focused on the luxury tier is because one of the benefits of CO Owning a home is that it supercharges your buying power, you know, the family that could have only afforded a half a million dollar home before can now afford a $4 million home. And if given the choice, you know, if you go into a market like Scottsdale, where the median is 1.5, you know, what you're gonna get for half a million dollars is very different than what you get for 4 million, right? So if given those two choices, most people would pick the $4 million home. So it sort of naturally elevates the price point that people can participate in. You know, it's kind of like, you know, one analog that people often use when they're talking about Pacaso is carpooling. You know, if you think about what housing affordability problems are, and relate that to traffic, and you think about carpooling and relate that to co ownership, would you rather have eight empty SUVs, gas guzzling SUVs, driving down the highway, or one fuel efficient SUV holding eight people, of course, you'd rather the fuel efficient SUV, it'd be lower cost for everybody and have less pollution, less traffic. And by sharing the cost of the vehicle, you know, you might be able to afford a $200,000 SUV, as opposed to a $50,000 SUV, right when you're when you're sharing the cost. So it's it's just a more efficient model for everybody for the owners, but also for, you know, housing at large because we're making better use of stock that would have otherwise housing stock that would have otherwise been sitting vacant for 10 months per year, because that's the norm for second home owners.

Mike Simonsen  23:11  

Yeah, that's really terrific. Let's shift gears, let's talk about the future. Let's talk about what you see in the future both in in the market fed because so is focusing on now but but also bigger picture like, like you've been in the in the the core of the real estate technology world for a long time. So tell me what you see is happening, things that like trends that consumers might care about, or, you know, shift in a minute. Tell me what you see in the future?

Austin Allison  23:39  

Yeah, absolutely. I mean, I think the biggest shift that we're seeing, and it might be the biggest shift, because this is closest to our business. So it's something we think about and see and experience every single day. But the biggest shift is definitely the work from home shift. I mean, there are millions and millions and millions of additional families now that have more flexibility, flexibility to work from home either part time or full time. And that flexibility has empowered people to rethink how and where they live and work. And more people are migrating to new locations that previously weren't practical. You know, second home markets are one of the most obvious places where people are migrating like if you were stuck in a city, a cold windy city, gloomy city before and now you have the opportunity to work from anywhere. And you've always dreamed about, you know, living by the water or living by the mountains or living in the desert, you know, where the weather is warmer or even living in a different state where maybe taxes are more favorable, or whatever the case might be, you now have that flexibility. So people are moving around. And what that moving around is doing is it's really creating a lot of imbalances between supply and demand. Like in second home markets where this is most pronounced. You have this permanent shift and new demand people that are going to these places that previously weren't really proud Article is primary home locations, and just not enough supply. And it's it's, there's no way there's really no way for supply that I can see, to catch up with demand and these locations, new constructions too expensive, the labor shortage is real, the cost of materials is going up, zoning is very restrictive land is locked and restricted in many of these places. So there's just, it's hard to see a scenario where we're going to be able to build our way out of this problem that we're faced in many of these markets. So I think that one of the biggest sort of movements that needs to continue to play out to mitigate some of these problems are making better use of existing resources. So obviously, we've already talked about CO ownership is one in the second home space, all these empty homes, you know, some of these markets have 50% of their homes occupied by second homeowners. Right, so you're talking about 50% of homes, and some of these markets are sitting vacant for most of the year. That is a shame, you know, that is a waste. And that's contributing to the problem. So that's one thing that we can do is make better use of empty homes. Another thing that we can do is make better use of empty yards. So like in California, they accessory dwelling unit is often referred to as an adu is a pretty innovative movement that's been happening for a while that I think is really starting to take off like the state of California just passed within the last year they passed a new rule, or I guess maybe it was last two years, I can't remember exactly a new rule that made it essentially required, you know, that that that municipalities support the development of ad use in in certain types of properties, which means that people can now take vacant yards, put units on those vacant yards and turn them into rentals, which creates more affordable housing stock for, you know, local workers, which I think is great. California also did something and I'm just using California as an example, because that's the state I'm most familiar with. Other states are doing similar things. But California also just passed this law, that's pretty controversial in certain communities called SB nine, which enables previously, and I'm just sort of I may not be completely accurate in the way that I'm describing this. But basically, the gist of how I understand it is it takes a single family, you know, parcel and it is enables it to be used as a multifamily parcel, right, so you can get more density, out of the same resources that we had in the past. And if you just zoom out and look back over the last couple 100 years, and how we evolved as a society, you know, as things get more dense and populated, it's important that we make better use of resources. So like a couple, 100 years ago, if you were to look at many of these towns that are now inhabited by lots of people, they were just farms, you know, they were just empty farms. And then over time, for as density and population rolls into a particular area as demand grows, farms turn into subdivisions, eventually enough, density grows, you know, and we start to be landlocked, and we build up. And that's how cities are formed. And and you so we're in a place now. And a lot of these markets were were just like constrained, and there's more demand and supply. And we have to figure out how to deal with that in a more sustainable way. And the most obvious way in my mind, is to make better use of underutilized, you know, assets. So that's definitely the biggest movement that we're seeing that that we think is, you know, just getting started and here to stay. There's a bunch of other really innovative things that are happening in the real estate world that are kind of outside of, you know, my realm, but that I'm excited about modular construction and prefab sustainable. You know, construction methodologies, I think are very interesting. And there's a lot of cool companies that I've heard about recently that are doing stuff in that space, I think anything around like virtual touring, Virtual Staging, you know, different types of photography innovations that make it easier for people to buy and experience homes and locations remotely. I think that's super interesting. And, and still ripe for lots of innovation and improvement even though we've come a long way.

Mike Simonsen  29:20  

Are you guys using the some of those innovations at Pacaso?

Austin Allison  29:24  

Yeah, I mean, like, we use mu, which is, you know, been around for a while now. And we do some some Virtual Staging stuff. But we're not doing nearly enough. I mean, I think I mean, a lot of people are buying Pacaso's now without, without visiting the home in person, but not nearly as many as I would expect. You know, like, with all the technology that's available today. I'm surprised that 50% of our owners aren't buying sight unseen. You know, it's like there's there's so much technology out there that you can really create an experience online that enables you to get To feel for definitely the home, but also the neighborhood. And you know what it's like to be in that home. And but I mean, I think everybody's still just in the early stages of trying to get this experience, right and take advantage of all the technologies that are available to get it right. Because we're not that we're not there yet. A lot. Yeah,

Mike Simonsen  30:20  

that's really interesting. So only a small chunk of of your buyers are buying, just from the website and

Austin Allison  30:26  

gain. Yeah, yeah. I don't know what the I haven't really tracked the percentage, but it's pretty small. I'd say it's like 20% or less. But it should it should be 50%.

Mike Simonsen  30:38  

It Yeah, that's really interesting. And let's see what what are the things that I might be interested in, in order to help me make that decision? Some of it is that being in the space, and I know, when I bought my second home, I bought my house in Tahoe. I looked at 25 homes before I bought that place. I you know, I wanted to see the right one I wanted to see, you know, like that, is the driveway too steep. Because if it's too steep, I'm not, you know, you can't get into the winter, like those kinds of things. So some of those things are really hard to capture, even if your Matterport 3d tour is very nice.

Austin Allison  31:11  

Yeah, I don't think they should be so hard to capture, though. I mean, the technology exist, right? Like, I mean, even something as simple as a FaceTime with your real estate agent. I know, that's kind of, you know, old school by today's standards. But if, if I'm on a, and I do that we do this often, where you know, one of our real estate agent partners will be touring a property that we're looking at or that our clients are looking at. And I mean, you could get a great feel for pretty much everything that you would want to know I mean, from you know, how close the neighbors are, to what the slope of the driveway is to the traffic on the street, like, you can capture a lot of that from a simple FaceTime. So just to use that as an example, I, I think there's a lot more that we could do to create amazing online experiences for people.

Mike Simonsen  32:00  

For sure. That's cool. There's some neat innovation to happen there still, and it's fascinating. You know, I look. And yeah, I look at a bunch of photos when if I'm, you know, if I'm shopping I look at I look at some photos, I like to see it I look at the map, I like to see where it is on the map. But yeah, there's, there's, you know, you kind of know, the neighborhood, but you don't really know like, there's some there's some interesting stuff to happen

Austin Allison  32:21  

there. And I think when you're buying a home, Mike Yeah, it's, it's a little different. Because like, that's a big, it's a big, clunky transaction. You know, it's it's hard to, like when you buy a home and then resell a home. I mean, you're talking months and months and months and lots of stress and headaches. So you really want to get that one right for sure. But one of the things that we've done at Pacaso is we eliminate all those headaches. So you know, let's say you wanted, let's say you knew you wanted to own a home in Southern California, a second home, but you couldn't justify owning it because it would be your third home. Now, since you have one in Tahoe, you could buy a Pacaso sight unseen, and wherever, you know, San Diego, Orange County, whatever. And then once you get there for your first day, and for whatever reason, like something wasn't quite right, or you found another home that you liked better, will allow you to move into that other home, no questions asked. Same day, you can sell your pecan quote unquote, sell your Pacaso and move into another one. Same day, no questions asked

Mike Simonsen  33:29  

interests. Like if I bought it, I bought it sight unseen. And then I get there and I go, oops. Yep, I like that one better.

Austin Allison  33:36  

Yep. 100% transfer guarantee. Yep, let's say and, you know, let's say you bought one for 300. And then you decide you want to upgrade to one for 500. You just apply the 300 your 500. Or if you bought one for 500. And then you later decide you wanted to buy one for 400, we'll refund your $100,000 difference, no questions asked same day. So we've just eliminated you know, the hassle of buying, right? And then you start to think about how that's going to, you know, really open up possibilities beyond borders. Like what if you wanted to own a home in Mexico, you know, it's really hard to buy a home as an American and Mexico or Europe or wherever, or it was really hard, you know, now it's not that that same seamless benefit. I mean, you could buy a home in Mexico with us and you know, 30 minutes, and we've already done all the research, all the diligence, we have all the financing integrated, you'd be pre approved, you know, same day, it's a very easy and seamless process and in this environment where inventory is super constrained, like the luxury of being able to go look at 25 homes now, before picking the one that you want, you know, those days are gone, and they're probably gone for forever, you know, in second home markets because there's so much more demand and supply even as things are cooling down right now. You know, I just don't see a scenario where You know, second home markets corrected a level whereby we start to have a radical abundance of supply again, I just, there's no, I don't I mean, I think there's too much demand that has shifted. Right. There's too many people that have flexibility. Now, I'm not saying things won't cool off, you know, they will they already are right. And as rates go up, that's likely to continue to cool off. But what I'm saying is, I don't see a scenario where supply outpaces demand in second home markets.

Mike Simonsen  35:31  

That's really interesting. I love that view of the future. Like, I like to capture the really, they're the startling ones. That's great. So and that's basically because we're not building very much supply we have we have a big chunk of millennials coming, we do have some boomers ready to to retire and sell. You know, have you looked at your demographics like age demographics for your Pacaso buyers?

Austin Allison  35:57  

Yeah, it's pretty vast. I mean, I would say the the brackets are 35, and the low end 270 something on the high end, but I would say the sweet spot is like early 40s, to mid 60s. That's typically what we see. And the common denominators are, you know, family is a big one. You know, a lot of people have kids, either kids that are in still in the house, or kids that are out of the house. And the reason why that's such a prominent, you know, attribute is because one of the main benefits of a second home is to be able to spend time with your family. Right. So a lot of people like to, to enjoy the second home with their family. So that's common denominator, most of our buyers are, you know, nearby their primary home location, like within a few 100 Miles some Okay, that's interesting fly. Yes, some people do fly. And there's some markets that obviously you have to fly like Hawaii, but other like Tahoe is very much a drive market. You know, most of the people that are buying in Tahoe are from San Francisco. Yeah. You see a lot of those characteristics in many of these markets. But then you have other markets, you know, like Scottsdale is a market where people come from all over, you know, California, Canada, Texas, like the Midwest, there's a really diverse group of feeder markets for for a place like this, and I'm not entirely sure what, what drives that. But it's pretty easy to figure out once you get into a market. I mean, just go talk to five real estate agents and ask the question, and, you know, by the end of those five conversations, you'll have a pretty good feel for where people come from.

Mike Simonsen  37:40  

Yeah, that's good. Do you guys ever do like city in city like condos?

Austin Allison  37:46  

Uh, yeah. So we actually have some condos in Miami right now. We just did a vertical unit in London, and Mayfair, the Mayfair area, which is really cool. And we're planning to do more of it for sure.

Mike Simonsen  38:03  

Because it does get hard in places like New York that have crazy real estate laws.

Austin Allison  38:08  

Yeah, some markets are are definitely more complex than others. New York's one of them for

Mike Simonsen  38:13  

sure. New York has its own

Austin Allison  38:15  

orbit. New York is at a at a stratosphere of its own.

Mike Simonsen  38:21  

Awesome. So okay, so we talked about the future? What? What do you think about the like the, the technology, we talked a little bit about the consumer showing technology you have any experience? Let's talk actually about this. Let me ask you about growing the company, your second time around, you built that loop? You've you've got some great partners and investors with Pacaso. Now you're growing fast. What can you share, get some lessons, just say do things differently this time around?

Austin Allison  38:53  

Yeah, I've gotten many lessons. I would say that fortunately, most of the things I wouldn't say that we're necessarily doing differently, we're just a bit better at it because we have more experience and history under our belts. So the most important one is people, you know, there really are. In my experience, there really are no shortcuts or silver bullets in business. Meaning it's like hard work. It's a struggle. You know, there's highs, there's lows, but if there is a shortcut, it would be hiring great people. And hiring great people is something that you know, any great leader or great entrepreneur will talk about, but it's a difficult thing to fully appreciate how important that is until you've lived through it. You know, until you've been part of a company that had a lot of people and you felt what the magic was when you've got a bunch of super smart people who are all really passionate about the same mission and a culture that empowers people to perform at their best and do their best work. If you can create that sort of environment, you can do anything, you know, like the sky is the limit in terms of potential when you have that setup. And I would say that we were able to create that sort of environment very quickly at Pacaso, because many of the people, you know, we've worked with for a long time, you know, most of the people on our, like, a lot of the people on our management team are people that I've known or worked with for almost 15 years, in some cases, and almost 10 years and all cases. And the same is true of many of the people throughout our org. And even the people who, you know, we didn't work with directly and prior companies are many of them are just one or are, in some cases, two degrees separated. So there's a lot of history amongst this team. And it enables and we're all super passionate about the mission. You know, we all wake up every day focused on enriching people's lives through second homeownership, and making the world a better place through through this new model. And that that's kind of the best lesson and shortcut that I can offer. There's a few other, you know, tactical things that I would say that have definitely been a bit more refined with Pacaso than they were in my first company. You know, one is finding Product Market Fit took us years to find product market fit at dotloop. And by product market fit, I mean, you've got, you know, a product that just really delivers great value for the customer. And it's obvious to the customer, and they're willing to pay for it. And it doesn't feel like you're pushing rope up a hill, it feels more like there's pool on the demand side. And, you know, we have more product market fit at Pacaso than I could have ever imagined. At this stage.

Mike Simonsen  41:43  

It sure seems like you've got some really big momentum. How many a

Austin Allison  41:48  

lot of that, you know, some of that's luck. By the way, I you know, a lot of it's hard work and assembling the right team. But I think the timing has been really good, too. You know, there's never been a better time to be in the second home co ownership business,

Mike Simonsen  42:01  

moly. Yeah. Because you launch Pacaso 2018? No,

Austin Allison  42:06  

2020 2020 Yeah. So yeah, we Spencer and I started working on it in 2019, during my year off, but we didn't officially form the company until early 2020. started hiring people, you know, on the team in the first quarter. And then we launched, we operated under stealth brand while we were trying to figure it out and optimize product market fit. But we were ready to launch pacaso.com in October of 2020. So we're a year and a half following Pacaso's launch. Wow,

Mike Simonsen  42:38  

man, that's fast. And yes. Wow, what a what an amazing time to launch into that space.

Austin Allison  42:46  

Your question were 300 people, we're about 300 people, and we're fully remote. And we were we were fully distributed by default. Before the pandemic, it wasn't a byproduct, we started fully remote. That was our intention. And it's been amazing. Our 300 People are spread across 35 states six or seven countries now. And we have no headquarter office location. Everything is done remotely, which is super cool.

Mike Simonsen  43:15  

That's cool. And it's it's really fascinating to to design the company from the start that way.

Austin Allison  43:20  

Yeah, big advantage, I think it would be it much harder. I mean, I have a tonne of respect and admiration for all the companies now that are making that transition, you know, to either remote or hybrid. And that's, I mean, I think that's where it has to go, it's hard for me to see a scenario where like, we go back to the same level, you know, in flexibility, you know, in the sense that you got to be in the office five or six days a week, like, those days are just gone for most industries. Not all but most, and I think it's much easier to start that way as opposed to making the transition.

Mike Simonsen  44:01  

Yeah. You find you have Pacaso employees working from the Pacaso they own in some. Yeah.

Austin Allison  44:08  

I mean, I right now i I'm working from my Pacaso right now. And it's it's pretty common, and not just Pacaso, crew members, but all of our owners. I mean, many, many of our owners are working remote, like people aren't vacationing at the Pacaso you know, it's not like when you when you I mean you know, your your second homeowner, when you go to your second home, are you on vacation? Do you tell people that you're on vacation? No, you're right. You're just hit your home, you've got a different group of friends, you've got your restaurants, you support your trails that you mountain bike on, like, you're part of that community, you know, you have a second life and that's how our owners are too. They're not vacationing at their homes. They're They're simply living at their second home. They just happen to be living at their second home for you know, less than all of the year. You know, About six weeks, eight weeks, you know 12 weeks depending on the situation but they're not vacationers they're they're living at their home. And most of the time most people work so oftentimes they're working from their their Pacaso for sure.

Mike Simonsen  45:14  

Amazing. Well, let's wrap it up here. Pacaso P-A-C-A-S-O. Now to add because the.com Where should they find you? Where should our listeners find and follow you?

Austin Allison  45:26  

You can find me on Twitter. So G Austin Allison is my my handle. My first name is actually Gregory. So that's where the G comes from G Austin Allison.

Mike Simonsen  45:36  

And, you know, that's

Austin Allison  45:38  

pretty much a great place to connect. Excellent. Pretty much where I hang out online.

Mike Simonsen  45:43  

Excellent. All right. Well, awesome. Thank you so much for your time, today's great conversation really interested in in the work you're doing. And I appreciate your insights about the future and the innovation that you're doing. So thank you so much. Really appreciate the opportunity. Thank you. Awesome. And everybody, this is the Top of Mind podcast. Thanks for joining us today. subscribe, do all the things go to altosresearch.com To connect the data to find more episodes of The Top of Mind podcast. Alright everybody, we'll see you soon.

Outro  46:17  

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