How Pacaso Makes It Easier for More People to Own a Second Home
Austin Allison's love of real estate surfaced at age four or five when he would work with a hammer in hand alongside his dad, who was a carpenter.
He bought his first house at age 17 and began selling real estate at 18.
Now, Allison is CEO of Pacaso, a second home co-ownership platform he co-founded in 2020 along with dot.LA chairman and former Zillow Group CEO Spencer Rascoff. Allison was also a Zillow executive.
The idea came to him when he and his wife dreamed of purchasing a second home, and found few options to do so.
"We were like most families who aspire to own a second home but could not afford it at the time," he said.
Allison saw an opportunity and a way to make second homes more affordable through a co-ownership model. He also believed that by consolidating multiple owners in one home, it would help the housing market in these communities by filling second homes year round.
Pacaso co-founder and CEO Austin Allison
The concept of co-ownership isn't new, but unlike "DIY" shared ownership arrangements among family members or friends, Pacaso manages all the details for potential home buyers. Pacaso purchases a home and creates a property-specific LLC. The home is listed through the MLS and on Pacaso's website, and potential buyers can then purchase the share of ownership they want, starting at one-eighth.
Each home has a maximum of eight owners. An owner with a one-eighth share can use their home at least 44 days throughout the year.
Once all shares have been sold, Pacaso transitions to handling ongoing maintenance, LLC oversight, bill payment and scheduling. Pacaso charges an initial service fee, which is a percentage of the home's sale price, and then charges a flat rate of $99/ month per share for its management services.
One of the benefits of buying a home through Pacaso is that buyers can purchase higher-end homes for only a fraction of the cost, making second home ownership more accessible. For example, someone can spend $500,000 to buy a share of a $4 million home. Allison calls this "right sizing" home ownership, because most owners don't need a whole home.
"It doesn't make sense to own 100% of something that you're only going to use 12% of the time, so why not just buy 12%," he said.
George, a Bay Area tech CEO and Pacaso owner in Napa, agrees.
"It was clear the team had really thought about what the shared economy looks like for vacation homes, and what it would look like for me and my wife who want to take advantage of a second home but are busy and active in our work lives," he said. "We're not retired or close to it, so I'm not going to be occupying a second home more than 15% tops. It's a perfect product for someone like me, and that helped us move forward quickly and become owners of a Pacaso home."
Lowering the price of entry for homes in desirable (and pricey) markets is opening up second home ownership to a broader buyer pool. Allison said many Pacaso owners are people in their 40s and 50s with children, and a quarter are non-white and/or part of the LGBTQ community.
Another benefit for owners, especially those who are still working full time or live far away, is not having to worry about the home when they aren't there. Pacaso is responsible for maintenance and management, simplifying the experience of second home ownership.
The model is common in commercial real estate, but not so much in the vacation home industry. It's different than the traditional timeshare structure, which is typically limited to hotels or resorts rather than single-family homes. Timeshare units are shared with up to 52 other people, rather than just seven other families.
Through Pacaso, the buyer owns their share of the property and can sell it on the open market. With a timeshare, residents typically own the right to use the property, not the property itself.
When it comes to wanting to sell the property, the process is similar to whole-home resale. It is listed on the MLS and the value tracks with the local market, which is a huge differentiator from timeshares, which typically lose value.
"One of the biggest hurdles for any buyer is understanding what Pacaso offers that's different from a timeshare. Seeing that there's value in ownership and you get to use it for what you need instead of feeling 'stuck in a timeshare' is hugely important," George said.
In addition to the benefits for buyers, Pacaso's model also helps the housing market at large by removing up to seven buyers from competition for each home. Demand for second homes increased 100% year-over-year in 2020, according to Redfin, as work became remote and people could work from anywhere. This spike in demand was felt in popular second home markets, where buyers were competing for the same homes needed by local residents. The net effect has been less inventory and higher prices.
Because most buyers of whole second homes only plan to use them several weeks out of the year, the homes sit empty most of the time. This means local businesses suffer, because more often than not, there's no one in the home to shop at local stores and patronize restaurants in the community.
Allison and his wife eventually used their savings and purchased a second home in Lake Tahoe in 2014. They became part of the Lake Tahoe community, meeting neighbors and making friends, shopping locally, frequenting restaurants and finding trails to run on.
He said, "It enriched our lives, which is how we came up with the mission of our company: to enrich lives by making second homeownership possible and enjoyable for more people."
"More people should have access to this dream," Allison added. "It shouldn't just be a privilege that's limited to the top 1%. Many tens of millions of additional people should be able to realize the dream. That's why we created the company, and that's what we plan to do across the globe."
What Data Does Snapchat Collect?
Snapchat, their primary application, collects a myriad of data on its roughly 363 million daily active users, from basics like device information to detailed location tracking. "From day one, we’ve embraced data minimization, and believed that the best way to protect user privacy is to not store data at all, and if we do have to store it, to do so for a short and fixed period of time," Snap spokesman Pete Boogaard told dot.LA.
As such, like most tech companies’ privacy policies and terms of service, the verbiage is intentionally vague or full of legalese designed to make the user gloss over and click “agree.” But Snapchat does have to provide its users some details of how it collects, stores, and uses the data it gains from interacting with the app.
Bill Budington, a senior staff technologist at the Electronic Frontier Foundation, told dot.LA that the common phrase, “necessary to provide service,” is particularly concerning.
“These are very vague ways to basically give a green light to very permissive practices in terms of your data,” Budington explained. He pointed out the ambiguous nature of the word “necessary,” adding, “[tech companies] can deem all sorts of things necessary, [including] using your location at every moment to better tailor their services to your life.”
While Snapchat’s terms of service haven’t changed since last November, the company most recently updated its privacy policy on July 29. Let’s dive into the various types of data Snapchat collects, how it stores it (and for how long), and perhaps most importantly, how Snapchat says it’s used.
Why Does Snapchat Collect Your Location Data?
Snapchat is very invested in collecting users’ precise location data, if users allow it. Its Snap Maps feature launched in 2017 lets users opt-in to showing their Bitmoji avatar on a map corresponding to their location and also allows them to track other friends who have opted in. It’s not dissimilar to Apple’s FindMy app.
In the past, the feature has raised concerns for its ability to make it easier for bullies and stalkers to find targets. Snap Map location, however, isn’t public information. Snapchat says location on Snap Maps will disappear after 24 hours, or when a user deliberately goes into “ghost mode” to hide from friends – but that doesn’t mean the app still isn’t tracking their movements. The company noted that unless you opt-in to live location sharing, the Snap Map won’t update with your location when you’re not actively using it.
Boogaard told dot.LA that while many of Snapchat’s core features do require location tracking, “location-sharing is off by default for all users” and “Snapchatters have complete control over their location sharing.” Snapchat added that there is no option to share your location with any user you aren’t friends with and that users have to individually select friends to share their location with.
Snapchat clarified that it does use location data to provide its Geofilters – custom photo and video filters often themed around specific places or events – and show people what’s nearby (also useful for ad purposes).
“We don’t share personal data about the users of the Snapchat app with data analytics providers,” Boogaard said.
Snapchat employees can also allegedly access all this information, and more – in 2019 Motherboard reported on a tool called SnapLion that it claimed was abused by employees to “spy on users.” In response to the report, Boogaard told dot.LA, “Any perception that employees might be spying on our community is highly troubling, and wholly inaccurate." Boogaard added, "Protecting privacy is paramount at Snap. We keep very little user data, and we have robust policies and controls to limit internal access to the data we do have, including data within tools designed to support law enforcement. Unauthorized access of any kind is a clear violation of the company's standards of business conduct and, if detected, results in immediate termination."
How Does Snapchat Use Your Content?
Snapchat can see the snaps you send, who is receiving them, and how often you’re online, as well as the metadata in each image.
Snapchat’s Streak feature (which tracks how long you and friends have regularly been sending and opening each other’s content) is one reason why the app also collects data on how often you and your friends open messages or capture screenshots.
It also tracks and scans the content users upload to its Memories feature. This is to train its AI to recognize the content of user images. In its privacy policy Snapchat notes that “if there’s a dog in your photo, it may be searchable in Memories by the term ‘dog,’” as part of its goal to make image search more accessible.
Snap’s policy also dictates that any public content a user generates on Snapchat is also fair game for the company to share though it doesn’t say how it will share this content.
What Data Does Snapchat Collect From Accessing Your Camera?
Besides the typical use for taking pictures, Snapchat can also access information from Apple’s TrueDepth camera – the front-facing, high-powered cameras that Apple’s iPhone X uses to record Face ID and Memoji data.
Snapchat says it uses this data “to improve the quality of Lenses”—its filter and augmented reality feature. But it also said it doesn’t collect biometric information, much less store the data on its servers or give it to any third parties.
Still, that’s a practice that’s come under scrutiny recently. In August, Snap was sued, accused of violating Illinois’ Biometric Information Privacy Act by collecting and storing users’ biometric data without their consent. That $35 million case is expected to head to settlement next week, after a judge couldn’t rule in favor of either party. "Snap continues to vehemently deny that Lenses violate BIPA, which was designed to require notice and consent before collecting biometric information used to identify people," Boogaard told dot.LA.
How Does Snapchat Use Your Data?
Now that we know all the information Snapchat collects, what is the company doing with it?
The main use case is advertising. Snapchat has a myriad of advertisers on its platform and they are all eager to turn users into sales by showing them the most relevant ads. Ad pricing starts at a modest $5 per day, so theoretically anyone with a marketing budget and the right connections could use Snap’s tools to market to its growing audience of Gen Z and Millennials.
Snapchat promises advertisers “advanced targeting capabilities,” and the benefit of finding a target audience using its location, demographics, interest and device data.
But who’s getting this information? That’s where things get vague. Snapchat doesn’t have to tell users specifically which companies are getting access to their data. The company notes it may share information with service providers that it contracts for services like ad analytics or payments. The company also says it might share user information with “business partners that provide services and functionality” for Snapchat, but again, doesn’t elaborate any further.
Snapchat also says it will share information about users if it could help “detect and resolve any fraud or security concerns, comply with any investigations, legal processes or regulations and to investigate potential terms of service violations.”
Snapchat doesn’t have to tell users when it turns over this data, though. In fact, most apps don’t.
How Does Snapchat Store Your Data?
Snap’s Support site notes Snapchat servers are designed to delete all Snaps automatically after they’ve been viewed by every recipient; the app’s trademark fleeting quality. The servers will delete unopened Snaps between two people after 31 days, and unopened Snaps sent to a group chat after 7 days. Snaps sent to your story are wiped from the servers 24 hours after posting.
Snapchat also says that when you delete a Snap in chat, it deletes it from its servers and will “make our best attempt” to wipe it from your friends’ devices.
If you post a Snap to Memories, though, Snapchat’s servers will back them up forever – unless you delete them, in which case they’ll be erased ASAP.
So what’s the safest way to protect your personal information on Snapchat? Well, Budington recommends an easy fix: simply don’t use it. But for people who are determined to keep their account but want to access what Snapchat collects, there are ways to download your Snapchat data.
You can also opt-out of audience and activity-based ads and third-party ad networks. This will mean the ads on your Snapchat will be less relevant, but the trade-off is that the app will use less of your personal data for marketing purposes.Snap is an investor in dot.LA.
Correction: An earlier version of this article incorrectly described Snap Map's location tracking feature. The feature needs to be enabled first, and Snapchat offers the ability to turn off the feature in Map settings.
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