A bit off topic. Just mentioning that corporations are also disturbing the secondary vacation home market with 'co-ownership'. They form LLCs and sell 1/8 ownership in e.g. high end areas. The effect is the aggregate sale of the property can be 1.5 - 2 times the single owner property sale. While timeshares (owned by corporations with…
A bit off topic. Just mentioning that corporations are also disturbing the secondary vacation home market with 'co-ownership'. They form LLCs and sell 1/8 ownership in e.g. high end areas. The effect is the aggregate sale of the property can be 1.5 - 2 times the single owner property sale. While timeshares (owned by corporations with 'usage shares' sold to individuals) seem similar these LLCs avoid any local timeshare regulations.
Individual (1/8) owners wishing to sell, are required to use the original corporation for the listing and resale. So the corporation is purchasing 'normal' single owner homes in these popular areas at somewhat over the market price, forms the LLC, and 'flips' the property as co-ownership. This provides a significant profit on the original flip plus ongoing profits from future sales by co-owners. The venture capitalists are salivating over this 'disruptive' concept and have made one of the current darlings (Pacaso) a unicorn (startup with over $1B valuation).
This disrupts the normal real estate market by pushing prices higher as well as takes properties for single families out of the market. An even newer trend is contractors purchasing empty lots, building a high end home 'on spec', and selling using the same arrangement. Meaning that empty lot you might have been considering purchasing and building now becomes out of reach.
A bit off topic. Just mentioning that corporations are also disturbing the secondary vacation home market with 'co-ownership'. They form LLCs and sell 1/8 ownership in e.g. high end areas. The effect is the aggregate sale of the property can be 1.5 - 2 times the single owner property sale. While timeshares (owned by corporations with 'usage shares' sold to individuals) seem similar these LLCs avoid any local timeshare regulations.
Individual (1/8) owners wishing to sell, are required to use the original corporation for the listing and resale. So the corporation is purchasing 'normal' single owner homes in these popular areas at somewhat over the market price, forms the LLC, and 'flips' the property as co-ownership. This provides a significant profit on the original flip plus ongoing profits from future sales by co-owners. The venture capitalists are salivating over this 'disruptive' concept and have made one of the current darlings (Pacaso) a unicorn (startup with over $1B valuation).
This disrupts the normal real estate market by pushing prices higher as well as takes properties for single families out of the market. An even newer trend is contractors purchasing empty lots, building a high end home 'on spec', and selling using the same arrangement. Meaning that empty lot you might have been considering purchasing and building now becomes out of reach.
I'm not clear on all of the ramifications of this new trend but this large sucking of value can be heard if you live (or want to live) in one of these areas. A recent article: https://www.npr.org/sections/money/2021/08/24/1030151330/a-unicorn-startup-is-turning-houses-into-corporations