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In the newest episode of the Power House podcast, Pacaso CEO and co-founder Austin Allison visits the show to talk about the pros and cons of the co-ownership mortgage model, affordability issues in real estate, and strategies for understanding and developing a strong monetization strategy based on a company’s total addressable market.
Pacaso is a co-ownership marketplace that offers vacation home listings to buyers that don’t wish to own a vacation property year-round. Buyers own the property alongside others to split costs and save money over time.
HousingWire CEO Clayton Collins begins the conversation by exploring Allison’s background in real estate before he founded Pacaso. At the age of 18, Allison began his career in real estate in Ohio after learning about it from his father through carpentry. Eventually, he saved up $4,000 and bought his first home. Years later, while in law school, Allison was inspired to launch his first real estate tech company, Dotloop, to automate his duties and help consumers simultaneously.
Allison traces his love for entrepreneurship back to his desire to solve problems and follow his passions. From there, he surrounded himself with the right people who could boost him to new heights he hadn’t realized before. Mentorship, angel investments and perseverance caused Allison’s company to skyrocket. He stresses the importance of remaining patient when it comes to entrepreneurial success.
“You see the same with people who have hits on the radio. You’re like, ‘Wow, this guy came out of nowhere.’ No, actually they started doing the work and singing when they were a child. They were grinding it out in karaoke bars in Nashville for 15 years before they had a break, and almost every startup story is like that,” Allison says.
As the conversation progresses, Collins and Allison dive into the importance of total addressable market (TAM), which is a way to figure out how much a product could make if it captures 100% of a market. Allison then discusses Pacaso’s business model and how it captures profit within its TAM. It charges customers a small mark-up based on the total volume of homes sold in their market and the unique value delivered by the firm.
This value allows Pacaso to capture a small percentage of the market for second homes, which could mean billions in profit over time.
From there, Collins asks Allison to explain Pacaso’s co-ownership market and what sets the company apart from traditional co-ownership models. Overall, co-ownership is a popular category that Pacaso thrives in by making the process easy for homeowners who don’t have friends or family to share ownership with. Pacaso protects buyers from foreclosure and assists with resale, should the situation arise.
Allison also predicts growth in the co-ownership model due to the rising affordability issues in the housing market. To further illustrate his point, Allison presents an air travel analogy to simply explain the benefits of co-ownership.
“Why do we fly on Delta or Southwest? If you can’t own the whole plane, you pool your resources together, and it’s a lot cheaper, more accessible and more efficient for us to fly on an airline,” Allison says.
Allison closes the conversation by exploring ways that a second home can promote unity and happiness within a family in ways that a primary home can’t. He recalls his past experience with purchasing a second home and hopes to give other buyers the same opportunity.
