President Jimmy Collins called Seattle Rotary Club #4 to order at 12:30 pm on Wednesday, January 12, 2022. The meeting was broadcast via Zoom. President Jimmy said that one of the benefits of being a Rotarian, is the monthly Rotary magazine that we receive as members. He urged that we peruse the magazine for ideas and inspiration.
President Jimmy introduced Todd Sommerfelt and Trish Bostrom. Todd and Trish played the song of the day: This Land is Your Land. The Inspiration for the day was read by Skip Kotkins. Skip spoke about a trip to Atlanta he made with the Seattle Chamber of Commerce years ago. While in Atlanta, the congregation visited Ebenezer Baptist Church. Dr. Martin Luther King preached at this church. Skip met Dr. King’s daughter. She was only 5-years old when her father was murdered. Even though she was very young, she remembers him telling her that the issues he was fighting for were not about him but about the cause that he was fighting for. Dr. King said, never give your detractors something to go after you personally.
Faith Ireland introduced a new member of Rotary Club, Jennifer Hohnstein. Welcome Jennifer. President Jimmy also wished Jennifer a Happy Birthday.
President Jimmy introduced the short program for the day; the Rotary Boys & Girls Club. The presenters included: Patrick Carter, Darrell Hennings, and John Zetlmaier. President Jimmy observed that the club has distinguished itself in basketball development and Hip Hop music.
Patrick Carter summarized the history of the club that began in 1939. He showed a slide of the club when it opened and how it looks today. He described with great pride the various facets of the Learning Center.
Daryll Hennings summarized the basketball program that started in 1996. It has been very successful, which is now known across the country as the Rotary team. 400+ boys and girls have gone on to college and some have played college basketball. Jon Zetlmaier spoke about the scholarship program which has raised $600,000 over the last 12 years. Jon showcased some success stories. He is also looking for committee members from Rotary.
Mark Davis introduced the featured speaker, Austin Allison who founded Pacaso, which has changed the second home real estate industry. Austin has created an entirely new category of second home buying through co-ownership. Austin launched Pacaso in October 2020. By March 2021 Pacaso had raised $90 million and was rewarded with the Unicorn status. In order to qualify for Unicorn status, the company has to be valued by over one- billion dollars in the first six months of operation.
Austin said that he started selling real estate when 18 years old. He eventually started a company that digitized real estate transactions. He ended up selling the company to Zillow.
After he and his wife bought a second home he started thinking about the concept which later became Pacaso. Pacaso seeks popular destinations like Palm Springs, Sun Valley, Bend OR, for residential properties. Instead of renting, or buying into a time share, you actually purchase 1/8 of the property with other buyers that you may or may not know.
Pacaso handles all the transaction details, which includes scheduling, selling, updating the property etc. When Pacaso purchases a property, they resell the home back to the new owners with a 12% markup. Austin said occupied homes are better for the environment and the local economy because an existing asset is being utilized. Empty homes are not good for the community.
Pacaso currently has 200 people working with the company but does not have a central headquarters or offices. Everyone works remotely. Austin believes the pandemic kick started this movement but people working remotely will not end any time soon. Austin said that he believed that there is a sustainability revolution going on that includes smaller structures on existing properties (micro homes.) Pre-fab modular homes are becoming much more popular as well.
Ken Grant hosted the Q&A session. Rotary members asked questions as it related to the structure of agreements, how to sell a property when the time comes, the number of markets Pacaso is in right now and what they plan for the future. All of the information can be found on their web site: www.pacaso.com.
Stephen Morse introduced next week's program which will be held at the Westin Hotel in downtown Seattle. Doors open at noon but the actual program starts at 12:30 p.m. You can also attend the meeting via Zoom. Tremaine Holloway will speak about a new Maritime High School that has partnered with the Highline School District. There is an estimated shortage of 30% of Maritime workers right now. The Port of Seattle and other entities have partnered with the Highline School District, so students can learn how to join the maritime industry.
President Jimmy ended the meeting at 1:30pm with remarks about a Seattle non-profit: World Without Hate. His final words for the day: Rotarians Inspire Hope.
Thank you Meeting Reporter
Paul Casey!
Additional Q&A from Austin Allison
Thank you so much for having me yesterday. It was a pleasure to meet your group. Here are responses to the questions we weren’t able to get to. Please don’t hesitate to reach out to our team with any additional questions. And remember to visit https://www.pacaso.com/seattle-rotary if you’d like to sign up to win a free two-night stay in a Pacaso home, or to sign up for our newsletter. Thank you!
What are the fees and cost of ownership after purchase?
Home operating costs, such as property management, maintenance, taxes and repairs, are passed along directly to owners transparently with no markup. Costs are shared pro rata. Owners pay an additional $99 monthly fee which covers LLC oversight, ongoing owner support, and the technology that enhances your owner experience.
How are property taxes handled? Does Pacaso assist in arranging maintenance, taxes, etc?
Pacaso manages all aspects of homeownership, including: direct property management, or choosing and overseeing the property management company in select markets; maintaining the LLC and resolving any disputes between owners or the municipality; continually innovating and improving the Pacaso app and other digital technology to help homeowners schedule more efficiently; and providing K-1 tax forms and handling property tax payments.
Pacaso is responsible for paying property taxes and will provide an annual K-1 tax form for each owner. Funds for taxes are included in the owner operating expenses. We are not tax professionals and suggest you consult with a professional for more information.
Additionally, Pacaso manages all home maintenance, including landscaping, tree trimming, gutter cleaning and pool maintenance, through locally hired professionals.
How do your management fees compare with the fees you would pay if you owned a condo?
Condo fees can vary widely depending on where you live and what services your condo association offers. At Pacaso, we have a set transparent fee of $99 per month, and all additional home operating costs are shared equally among the owners.
How many days per year do you get for a unit? How do the multiple owners divide up use over the year?
Your access depends on the number of shares you own. Each share gives owners up to 44 stay nights, and they are tracked on a 365-day basis. For example, if your ownership anniversary date is October 18, 2021, we’d count the total number of stayed nights between October 19, 2021, and October 19, 2022.
Owners book time to stay at the home using the Pacaso app, powered by our SmartStay™ scheduling system. It’s easy to use and equitable for owners, based on the number of shares you own. The system supports two types of stays: general and short-notice. General stays are scheduled 8 days to 24 months in advance, and each owner has access to a general stay that falls on a special date (e.g., federal holidays and popular local events). Short-notice stays are booked 2 to 30 days in advance of arrival. (Note: For homes with unsold shares, the short-notice booking window is 2-7 days in advance of arrival.) See additional scheduling FAQs for more details.
How do you differentiate unit value based on the fact that some homes are more desirable during the Winter, rather than the Summer?
Our SmartStay™ technology gives owners the opportunity to have equitable access to their home all year long. We also find that the diversity of ownership in a given home means that people naturally tend to have different preferences on when they like to use their second homes.
What happens if one of the co-owners can no longer afford to pay or refuses to do so? What is the foreclosure route?
As the manager of your home’s LLC, Pacaso will assume financial responsibility if an owner defaults on payments. This is one of the benefits of our ownership program.
Pacaso serves as the corporate guarantor of any share financing, protecting you should another owner default. In the unfortunate event of an owner default, Pacaso will step in to service the loan. If not resolved within 90 days, we will foreclose on that specific share and manage the resale without any disruption to the ownership group.
Have you dealt with owners of second homes interested in sharing their homes?
Owners are not permitted to rent out or sell time on vacation rental sites or other public rental listing services. All guests must be registered and have the Pacaso app on their phone to access the home.
How could this approach eventually open up access to housing for the general public in Seattle?
One key benefit of our business model is that it redirects second home buyers who would otherwise be competing with primary home buyers for mid-tier homes to the luxury market. This opens up inventory at lower price points for local primary homebuyers.
In general, we see co-ownership as a way to promote accessibility in housing. While we currently operate in the luxury market, we believe that there has been a step change in the real estate market, and that co-ownership of homes is going to continue to rise in popularity.
Do you get involved in development?
We do not operate as a developer, but we do occasionally purchase new construction homes directly from developers and are always open to meeting new developers who work in luxury residential real estate.
