Pacaso, a company that helps people buy and co-own luxury second homes and the fastest U.S. company to receive unicorn ($1 billion) valuation, has expanded into Canada and hired Canadian entrepreneur Razor Suleman to be president of Pacaso International.
Suleman will oversee the company’s international expansion into Canada, Europe and Mexico. It currently operates in 20 second-home destinations across the United States.
The concept is aimed at helping people buy and co-own high-end vacation homes that may have become inaccessible to most Canadians due to increasing prices.
Suleman, who was the CEO of Canadian tech innovation Elevate and will remain as the organization’s board co-chair, says Pacaso’s mission is to “enrich lives by making second-home ownership possible and enjoyable for more people.
“Families have been buying second homes for generations. Often the grandparents will pass it down to their kids and there will be four people sharing a home in Banff or Muskoka,” he says. “So what Pacaso is trying to do is take that generations-old practice and try to standardize it, professionalize it and make it turnkey. Pacaso will find beautiful luxury homes in secondary-home markets like Blue Mountain, Ont. It will acquire the home. It will do the home inspection. It will do the closing. It will pay all the taxes. It will help with the financing and then it will break that ownership up into up to eight shares – although the average is about five or six. Some families choose to buy eight. Some buy a quarter. Some buy a half.”
Suleman says most second homes sit vacant 80 per cent or more of the time. Pacaso is helping people buy a percentage of the home and it will find like-minded families to buy the other percentage. The company will manage the property turnkey. It will also manage the booking of time when an owner of the share wants to be there.
“Not only is it 75 per cent, 85 per cent less expensive for you to get into the home but then it is a turnkey managed service (and) all the bills are divided by the shares,” he says. “That’s really the premise and the value proposition of Pacaso.”
The company was founded by former Zillow executives Austin Allison and Spencer Rascoff. It launched in California in October and Suleman said it saw some “amazing” traction and demand from the beginning. It quickly moved into 20 markets in the U.S. Since Pacaso’s launch, more than 1.5 million people have visited its website. As of March, Pacaso raised $90 million in equity financing and achieved a valuation of $1 billion, making it the fastest U.S. based company to reach unicorn status.
“We were seeing so much interest and demand from Canadians wanting to buy a second home through Pacaso. Canadians love warmer weather and love to be snowbirds. We’ve already got Pacasos in Florida accessible to Canadians. We already have places like California, online, accessible to Canadians. But what we want to do, and why I was really excited to join the organization, is to buy Pacasos in beautiful, aspirational luxury single-family homes across our great nation,” Suleman says.
“So whether it’s our friends in Toronto who tend to buy in Muskoka, the Kawarthas, Blue Mountain, Prince Edward County or the Niagara region or our friends out West who want to enjoy Banff or Kelowna or Whistler, we really want to make those key second-home destination markets accessible to more Canadians.”
Suleman says there are two ways for a home to turn into a Pacaso. The company could buy a home, usually with an anchor co-owner, and then go out and sell the other shares. Another way is someone might have a home that is sitting empty for a long period of time and the value of their home has increased. So Pacaso will buy a majority share of the property.
In a statement, Pacaso’s CEO and co-founder Austin Allison describes Suleman as “an incredible force in the business world,” adding that when the company was planning its international expansion it wanted someone who isn’t afraid to think big and “who has innovation written into their DNA. That’s Razor in a nutshell.”
Suleman says the global pandemic changed the behaviour of Canadians as everyone had to shelter in place and international borders were closed. But the need to travel and gather with family in a safe way was always a high desire of Canadians.
The pandemic simply accelerated demand for second homes.
“That one per cent (of the population) has always been able to buy a home in Whistler, in Muskoka, even though the prices now are 50, 60 per cent more expensive. But for the everyday middle class, upper middle class, teachers, accountants, professionals, the prices are getting so astronomical that it’s not feasible for most families to spend $2 million on a second home,” says Suleman.
“But now with Pacaso, because we buy the home, we’re a fully managed service, you can buy a share, which is about an eighth of a home, which is 44 days, for $300,000.”