Are we willing to sell out our neighborhoods to the highest bidder? That’s indeed the question that Pacaso raises for the residents of Sonoma.
Pacaso is a new real estate company backed by hundreds of millions of dollars of funding. They’re buying up properties in Sonoma, Napa, and other wine country destinations. They offer “fractional” ownership of 1/8 of a home, which is a glorified timeshare as your “ownership” in a Pacaso home is defined by the amount of time you’re allowed to stay: 1/8 ownership give you 44 days, but no more than two weeks at a time, which you can give to family and friends.
They fancy themselves “disrupters” but the only thing they’re disrupting are our local neighborhoods. The only thing innovative about this company is its legal strategy at avoiding timeshare regulations and taxes. Pacaso is litigious and they’re bullies. They’re suing the city of St. Helena in Napa because St. Helena classifies Pacaso as a timeshare and won’t allow it. Pacaso won’t hesitate to sue local municipalities to get their way. Do the local communities have the money to challenge? For those wondering, well how is this different from Airbnb? People who stay at Airbnb pay TOT taxes into our local community. Pacaso users will not pay this tax. There are also regulations in place for where Airbnbs and other vacation rentals can operate.
With Pacaso, they can buy into any neighborhood and flip it into a fractional ownership/timeshare. What’s the big deal? Well if you think Sonoma has changed in the last few years, wait until this business model sinks in. Within a few years, our local neighborhoods will be a revolving door of tourists staying in residential homes, using our facilities, and not paying taxes. Plus this puts a bigger burden on an already crunched housing market. Is this what we want for our community? I don’t think it is.
That’s why I and the residents on my street are fighting this fight. It’s about the big picture, the long term. Sonoma is a special place and we have to work hard to keep it that way. “Community” means different things to different people, but once you lose it, it’s hard to get back.
So how can you help? Put pressure on Susan Gorin, the City Council of Sonoma, and sign our petition.
— Brad Day, Sonoma, with STOP: Sonomans Together Opposing Pacaso
All they are doing is to allow for 1/8th ownership. Someone who can not afford to buy a $4mm home now can have a slice of Napa or Laguna Beach for $500K, a more affordable sum. Most of the buyers are families and they want to create memories in these homes. I am failing to understand what is so bad about it? Really! That $4mm home wasn’t affordable to start with.
The 4 million dollar house is actually worth somewhere between 2 and 3.3 million. So as you say it would never be considered affordable housing. Pacaso has a money making business model and can afford to pay well over any home’s real assessed value. They do not need a loan to buy a home like you or I would. They most likely have lines of credit that they can draw on, as investors see them as a sure thing. On this 4 million dollar home they will make about $800,000 just on the sale to the 8 owners. Then they will make money on the management fees. The real issue comes in when they start buying the $500,000 properties at over assessed value, fix them up and sell to 8 people. They will eventually use up the supply of buyers who can pay $600,000 or more for their share and begin looking at the market of those with $100,000 to spend, meaning they will be looking at lower priced houses. They have done this already in Napa and if you look at their web site you will see 1/8 shares in smaller more affordable homes in other areas, going for $200,000. Just something to think about.