Fractional ownership puts you on the deed for a quarter of the price

Fractional ownership has long been a way for multiple buyers to share ownership of a home in Hawaiʻi – most often an expensive vacation property on a neighboring island.

Now at least one national company has made more fractional ownership available on the islands, and another may soon join them.

The new models of vacation ownership are a far cry from the old timeshare model where shrewd salespeople lured buyers into seminars where they were coerced into buying a week’s worth of time in a beachfront condo they didn’t sometimes couldn’t afford.

Tyler Coons of Keller Williams Realty Maui says he recently helped Pacaso acquire a single-family home under construction near Ka’anapali that will be sold fractionally. | Photo: Exotic Estates

Many condo owners today could afford to buy $6 million condos or homes in Hawaii themselves, but choose not to, often because they don’t plan to spend as much time on the island, says real estate agent Tyler Coons of Keller Williams. Realty Maui, which also owns a luxury vacation rental website called Exotic Estates and a property management company called Welcome Hawaii Properties.

“He’s someone who doesn’t want a $6 or $7 million house on Maui, even if he can afford it, because he wouldn’t use it,” and he can’t rent it because laws here, says Coons. With condominiums, he says, “they can get a slice of paradise at the level they’ll enjoy when they’re there.”

Starts with 3 properties

The biggest new fractional player in Hawaiʻi is Pacaso, which announced in March that it had entered the local market with its purchase of a three-bedroom luxury condominium at Kapalua Resort in Maui.

Pacaso was co-founded by CEO Austin Allison, who sold his first real estate technology company, Dotloop.com, to Zillow for $108 million. Pacaso refers to its business model as “co-ownership”. Pacaso buys a house using an LLC and then sells shares of that LLC to its clients, which means each buyer gets the equivalent of a few months to use the house each year. In Hawaiʻi, Pacaso only sells quarter shares and half shares of its properties, which means owners have three or six months.

Pacaso’s second Hawai’i home is a three-bedroom, 3.5-bath unit at Hoʻolei Villas in Grand Wailea, which is available for a quarter-ownership at $1,886,000. And Coons says he recently worked with Pacaso on acquiring a third Maui property, a new single-family home under construction near Kaʻanapali.

The company is likely looking for more properties on Maui, and possibly other islands, Coons says, but since the homes it targets start at more than $4 million, it’s unlikely to compete with many. many local buyers.

“Pacaso aims to help people buy an existing luxury home four times or more the destination’s median home value,” Allison said in a statement in March. “Our homes are occupied nearly 90% of the year, and we look forward to seeing Pacaso owners contribute to the local economy and participate in the community year-round.”

Company backed by Bezos and Benioff

A third company that may soon enter the Hawaiian market is Arrived Homes, a Seattle-based company whose backers include Salesforce CEO Marc Benioff and Amazon.com founder Jeff Bezos. It is primarily a real estate crowdfunding platform that allows investors to invest as little as $100 for shares of single-family rental homes.

The Arrived Homes website recently announced: “Upcoming Vacation Rental Properties“.

“Our team has been very busy preparing our latest investments for you. Each of our vacation rental properties is currently staging and will be available soon! We are excited to create access for all to this incredible $13 billion market. of dollars.

There’s no mention of Hawaii, but Benioff is a longtime, part-time resident of the island of Hawaii and Bezos is a part-time resident of Maui, so it’s likely the company is considering at least to enter the split market in Hawaii. .

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