Austin Allison is trying to change how Americans buy second homes.
As the co-founder and CEO of Pacaso, a startup that sells partial ownership stakes in luxury vacation properties, Allison has a sweeping vision: make homeownership more accessible by letting multiple buyers split the cost of a single home.
He explains his strategy through a familiar Silicon Valley parable. In 2006, Elon Musk outlined Tesla’s “secret master plan”: start off selling an expensive sports car, then use the profits to build for everyone. Allison took the lesson of Musk’s success to heart — starting in a luxury niche can be a means to a broader, transformative end.
For now, Pacaso is “very much still selling Roadsters,” Allison said.
For as little as $500,000, buyers can purchase a one-eighth ownership share of a turnkey home in some of the most lusted-after destinations in America. The listings page is a never-ending scroll of real estate porn: A coastal modern mansion on Pacific Coast Highway in Malibu for $2 million, a five-bedroom on Miami Beach’s Venetian Islands for $619,000, a Park City house with sweeping views of the slopes for $950,000.
Pacaso promised a frictionless experience, handling everything from scheduling to maintenance to resale, while marketing the homes as assets that can appreciate over time. But now, owners and local regulators say its business mirrors the timeshare model, a comparison the company has spent years trying to shake.
Allison believes that down the line, fractional ownership — homes owned by multiple parties — could alleviate the housing crisis.
“Homeownership is broken in so many ways,” he said, “I don’t think 10 years from now our offerings will be just for wealthy families.”
Allison, a blond, tanned former real estate agent from Ohio, often leverages his childhood as a narrative tool for the Pacaso brand. A second home was out of reach for his working-class family, but it shouldn’t have to be.
Coming from him, it sounds like a billion-dollar idea. At first, it was.
Once a unicorn
Allison got his start in proptech in 2009 founding Dotloop, which he sold to Zillow for $108 million in 2015. It was there that he met Zillow’s founder and his future partner on Pacaso, Spencer Rascoff. Rascoff is now CEO of Match Group, the conglomerate that owns all the major dating apps in the U.S., as well as the chair of Pacaso’s board.
Rascoff and Allison launched Pacaso in 2020, right as the pandemic restrictions fueled a vacation home-buying frenzy. Redfin reported an 84 percent spike in applications for second-home mortgages as demand surged in desirable destinations and prices soared.
Pacaso, which generates revenue through a combination of transaction and property management fees, quickly ascended. In 2021, just five months after launch, the startup reached a $1 billion valuation, earning unicorn status.
Then the market shifted. Rising interest rates, inflation and surging housing costs cooled the startup’s growth. The following year, the company slashed its headcount by 30 percent, and its valuation dropped below the billion-dollar mark.
The company also faced scrutiny over its financials particularly during a 2024 Reg A+ funding round, a way of crowdfunding from retail investors. The effort drew criticism from industry figures, including Vacasa founder Eric Breon.
In a LinkedIn post, Breon pointed to the company’s use of cumulative profit figures, which showed steady growth — from $29 million in 2021 to $95 million in 2023 — while gross annual profit rose to $44 million in 2022 before dropping to $15 million in 2023.
“We might as well go spend a month in Europe for what we’re paying.”
“This disgusts me,” Breon wrote on LinkedIn. “Pacaso’s raise seems designed to deceive.”
Breon did not respond to a request for comment for this story. SEC filings also showed a steady decline in sales of shares, dropping to a low of 279 in 2024.
Pacaso ultimately closed a $72.5 million funding round in October, which the company touted as an overwhelming success.
To Pacaso’s critics, it all sounds too good to be true.
Since its inception, the company has faced criticism that it is a gussied-up timeshare rebranded for a 21st century, tech-forward audience. Timeshares are widely viewed as predatory investments, in part because companies control the resale process, making them difficult to exit.
Pacaso vehemently denies the comparison at every opportunity.
“A timeshare is a liability, not an asset. A timeshare is an obligation to stay at a hotel at a discounted rate forever,” Rascoff said at TRD’s Los Angeles Forum in 2024. “There’s very little liquidity on resale, it’s very difficult to get out.”
In a traditional timeshare, buyers typically purchase the right to stay at a property for a set period each year, rather than an ownership stake in the real estate itself. With Pacaso, buyers own shares of a home through an LLC.
It’s a central argument for the company: How can we be a timeshare if you own the house?
It helps that Allison and Rascoff walk the walk — both have purchased Pacaso shares themselves.
“I own one in Malibu,” Rascoff declared at the 2024 forum.
It should be noted that some timeshares sell interests in real property. But despite the structural differences and the founders’ own participation, some Pacaso owners say their experience closely mimicked a timeshare.
Owners who spoke with The Real Deal, many on the condition of anonymity, described years of rapid cost increases with little explanation. TRD reviewed documents supporting their claims. Owners say they have had little recourse to address rising prices for property management, maintenance and insurance. Those who pursued resale described an opaque process, controlled by Pacaso, that did not deliver the gains or speed the company advertised.
Christopher Pitet, an attorney for former Pacaso owner Bill Allen, offered this warning for potential buyers: “Exiting might be a problem.”
Emerging cracks
For some owners, the experience of trying to exit reinforced the comparison Pacaso has long tried to avoid.
“The process of getting out; that felt like a timeshare,” said Mark, an owner speaking under a pseudonym. “If you are trying to build equity in a second home, this is not something you should do.”
Pacaso’s website advertises average resale gains of 10 percent, though Allison told TRD that figure has more recently dropped to 6 percent. He denies that the company advertises its shares as investment vehicles.
As costs rose, Mark decided to sell. He and his wife listed their share above what they paid, hoping to capitalize on market gains. While Allison says that Pacaso shares typically sell in 100 days or less, theirs languished on the market for months.
“The house was great,” he said. “It’s still really hard to get out, because it’s such a weird product.”
They ultimately sold more than a year after listing, absorbing operating costs in the meantime. Part of the trouble, he said, was Pacaso’s control over the resale process.
“They are the listing agent, there’s no way to get rid of them as the listing agent,” he said. “You’re at the mercy of their marketing.”
If Mark had hired a real estate agent, he would have had to pay them in addition to Pacaso’s contractually required commission. He decided against it and waited out the Pacaso-led process. Mark ultimately sold at an approximate $70,000 loss once fees were deducted.
In his view, he got lucky. When he and his wife went to sell, they were the only owners in their home looking to do so.
That wasn’t the case for Bill Allen, a Newport Beach Pacaso owner who sued the company in 2023. Allen alleged that Pacaso sold another owner’s share before his, despite Allen listing first. Pitet, his attorney, questioned whether the company could fulfill its obligations to multiple sellers at once.
“Our beef was, how could Pacaso satisfy their fiduciary responsibilities to both clients at the same time?” said Pitet.
Allen settled with Pacaso in 2023 and the company sold his share, Pitet confirmed, but declined to disclose the terms of the settlement.
Other owners raised concerns about multiple shares in the same house at once, creating what they see as an inherent conflict in the model. Allison disagrees.
“Anybody who bought a home thinking that costs would not go up over time… I’m just not sure how you could ever get into that situation.”
“There’s zero conflict of interest,” he said, comparing it to selling different units in a condo building.
But condo units can be meaningfully different from one another. With Pacaso, the main distinction between shares is booking rights over a limited window of dates.
Pacaso does not prioritize the first share to market, Allison said. Owners set their own prices, and buyers choose based on budget and preferred dates.
The company also charges a 12 percent markup on initial sales, compared to a 6 percent commission or less on resales, raising questions when both types of shares are listed at once.
Allison compared it to a real estate agent representing a $1 million listing and a $10 million listing.
“Every real estate agent on the planet deals with this every day, right?” he said. “I’m not changing my behavior because I’m making more money on the $10 million listing.”
But unlike a traditional broker-client relationship, Pacaso owners cannot remove the company as their listing agent, even if they feel the company isn’t marketing their share with the same gusto as listings with a higher commission.
While Allen raised concerns about fiduciary responsibility in his suit, he also alleged that Pacaso was using unlicensed agents to sell the ownership shares.
Allison called these accusations “silly and misinformed,” saying selling interests in an LLC does trigger licensing requirements. He said, “A lot of our people are licensed,” but declined to confirm whether Pacaso uses licensed agents in all of its transactions.
Another owner, Rebecca, who asked to use a pseudonym, said she and her husband bought their share in 2021 after seeing an advertisement in the Wall Street Journal.
Nearly five years later, she said, they still love the home itself.
But, she added, “We are not happy Pacaso owners.”
Operating costs for Rebecca’s home have increased 53.3 percent in the five years she’s owned the home.
“We had planned to hold for a long time, but when we see these operating costs going up at this rate, we might as well go spend a month in Europe for what we’re paying,” she said.
Allison said that operating costs have risen below or in line with broader market trends, citing inflation and insurance increases.
“Anybody who bought a home thinking that costs would not go up over time,” he said. “I’m just not sure how you could ever get into that situation, it’s just such an obvious thing.”
Turf wars
Pacaso’s troubles extend beyond its unhappy customers.
Since 2021, at least a dozen municipalities have moved to regulate Pacaso homes as timeshares, restricting its expansion, according to an analysis by TRD. The company has filed lawsuits against St. Helena and Newport Beach in California and Sullivan’s Island in South Carolina in response to their timeshare regulations.
Allison pushed back, framing the resistance as exclusion.
“In places like Newport Beach, there’s a lot of elitists sitting in their $8 million homes that don’t like the idea of someone who can only afford $1 million to live next door to them,” he said in an interview with News Nation in 2023.
Despite the criticism, communities are still regulating Pacaso homes as timeshares.
Pacaso has since settled its suit with St. Helena and Newport Beach. Its litigation with Sullivan’s Island is ongoing. Representatives for the town did not comment for this story.
Next stop: Share swaps
As challenges mount and sales slow, Pacaso is looking for new paths to growth.
“The big innovation we’ve been doubling and tripling down on,” Allison said, “is swap.”
In February, the company launched Infinity, an invite-only home-swapping network allowing members and Pacaso owners to trade stays across properties. The model expands Pacaso’s footprint while reducing reliance on its co-ownership business.
The concept closely resembles timeshare exchange programs, which allow owners to swap stays between properties.
Pacaso expects the platform to serve as a funnel for its core business. Allison described it as an “incubation tool.”
“It’s kind of like the way a software company would give you a freemium product that is limited,” he explained. “At a certain point, you have to pay to upgrade.”