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A Startup Is Turning Houses Into Corporations, And The Neighbors Are Fighting Back

What are your thoughts on this timeshare NPR article (that you can Google directly)

To make second home ownership possible for more people — and, of course, make money — Pacaso uses a "fractional home ownership" model. They buy a house, lightly refurbish it, furnish it and then create an LLC for it. They then divvy up ownership of this corporatized house into eight fractions and sell those shares on their website.

If you buy a share in a house, you're able to stay in it 44 nights per year in increments that can't exceed 14 consecutive days per visit. You can also "gift" these stays to friends or family. Pacaso offers an app to handle the logistics of booking stays. It oversees management, maintenance and cleaning of the property. In exchange for all this, it charges 12% of the home's purchase price upfront and monthly fees going forward. If you buy a share in a house, you have to hold on to it for a year. After that, you can sell it and profit from any appreciation in the home's value (or be on the hook for any depreciation).

The county, Day says, had designated their neighborhood an "exclusion zone," which bans Airbnb-style, short-term rentals to preserve the "residential character" of communities. But Pacaso argues that its clients are not short-term renters. They are co-owners of an LLC. This also means they don't have to pay the typical taxes on short-term rentals. Likewise, in the nearby town of St. Helena, Pacaso was trying to circumnavigate a city ban against timeshares with the same argument. Day says he and his neighbors saw Pacaso's newfangled business model as nothing more than a "glorified timeshare" with a legal strategy aimed at "skirting regulations that are designed to keep communities intact."

submitted by /u/TriggBaghodlerRltr
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source https://www.reddit.com/r/RealEstate/comments/pdv8r5/a_startup_is_turning_houses_into_corporations_and/
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