Bezos already disrupted the vacation rental industry as an early investor in Airbnb more than a decade ago before anyone had ever heard of it. Now he’s looking at doing the same with Arrived Homes. The Maui estate owner has turned his Midas touch to fractional vacation rental homes, including Hawaii. This is a new take on Pacaso, with some major differences between the two that we’ll talk about.
The Amazon founder is not new to Hawaii. He had the foresight to move here and get positioned at arguably one of the most beautiful spots on Maui. Bezos closed on the La Perouse Bay location not far from Wailea to make Maui his island home last year.
Bezos invests in Arrived Homes – Fractional vacation rental homes from $100 to $10k in initial investment.
A new way to be part of Hawaii is fractional ownership in single-family rental properties. We first reported on this topic last year with Pacaso. The company Bezos is investing in is Arrived Homes. Bezos was an early participant in its funding round last year, which invested $37 million in seed money and then in another $25 million recent round. Arrived Homes says investment opportunities for those of us not in that billionaire category range from $100 to $10,000 in ownership. In Hawaii?
Arrived Homes is entering the short-term vacation rental marketplace. This is so new that it’s not yet reflected on their website. Arrived Homes is amassing properties that they will rent out via Airbnb in the next 90 days. There’s a lot we don’t yet know and it remains to be seen if your investment might include any nightly stays, or discounts thereon, whereas, with Pacaso, you do have that ability. Also, who will be managing and maintaining these new vacation rental listings?
Arrived Homes is so popular that it is hard to get in on their rental home investments.
It comes as Airbnb just hit its highest profits ever. Bookings in the quarter of over 100 million nights, which was up 25% compared with 2021.
When Arrived Homes added a batch of 12 long-term rentals to their website, they reportedly sold out in 8 minutes. To our knowledge, no Hawaii vacation rental properties have made it to Arrived Homes yet. But they’re coming.
Maui’s Bezos bets against higher-end fractional Pacaso.
We first learned of Arrived Homes competitor Pacaso earlier this year. It was a name previously unknown to us. Pacaso, launched in 2020, buys homes, then sells them via membership in an LLC to those interested in a new kind of Hawaii fractional ownership. They have had a series of Hawaii listings, although only one is currently listed on Maui (see below).
Pacaso’s website says it is “Co-ownership, simplified.”
They manage the home, and you own part of it. It’s the modern way to buy and own a second home. The innovative startup was launched last fall by prior executives from real estate Zillow. Pacaso buys properties and then sells second-home buyers’ shares in them. This isn’t traditional fractional ownership, where you might buy one, two, or more weeks annually. Instead, Pacaso properties are being split between eight or fewer owners, depending on the situation.
While forming an LLC to own property between already connected individuals is nothing new here in Hawaii and elsewhere, what’s different this time is that the owners do not know each other. Pacaso operates in 30 regions worldwide, where it owns and manages homes.
Disruptor Pacaso comes to Hawaii.
This spring, Pacaso announced that it was selling shares of its first Hawaii second-home, a Kapalua, Maui condominium with spacious bedrooms and breathtaking views of the Pacific Ocean, featuring spectacular sunsets. The cost of ownership of this beautiful unit near championship golf courses not far from the historic town of Lahaina and Kaanapali Beach was $1.45M per share, based on a maximum of four owners participating.
Pacaso has said it will not disrupt the mid-priced Hawaii real estate market since it will only acquire Maui homes with a value above $4 million. Such was the case with the home near Montage Residences Kapalua Bay. Pacaso currently has one available listing on its Hawaii property page: a $7.5 million home. It is being sold in 25% shares at $1,886,000. It looks as though the remaining prior listings were sold.
Pacaso and Arrived Homes aren’t alone in this new luxury home fractional membership.
Another company we learned of had been working in the lower end of the market. Cohana Homes previously listed three Maui homes that were fractional residences from $958K to $3.3M, which appear to be sold in a similar fashion to Pacaso. The apparent difference is that Cohana operates at a much lower end of the Maui real estate market than Pacaso.
When we returned to check their Hawaii listings today, however, we found that there were none.
Hawaii residents are worried as home prices continue to skyrocket.
The issue has residents and the government taking a second look. A Maui council member indicated they have received complaints and are looking into the legality of it all.
The cost of homes, primary or secondary, has been soaring in Hawaii. We just heard of another multi-million dollar Kauai luxury home being sold at well above the asking price, sight unseen, by mainland buyers, without any inspection-related repairs or contingencies. What’s happened is that investors from the mainland often outprice Hawaii residents.
Hawaii is learning by example as Pacaso hits headwinds across the country.
Others vacation destinations, including Long Island, Santa Barbara, and Palm Springs, among others, are struggling to control Pacaso, calling it another form of a timeshare. Then in Northern California, the tourist town of St. Helena banned Pacaso after the company and city had been in court for the past year to determine whether the city’s ban on timeshares applies to Pacaso.
There, outspoken neighbors who oppose Pacsco wanted to preserve their communities and prevent other unwanted aspects of what they deem short-term stays. Neighbors said in planning commission testimony that they suffer from “the intrusions that living adjacent to a hotel bring.”
Pacaso says its homes are not any form of a timeshare. A Pacaso representative also said of their co-owners, “these are people who want to invest in our community. It’s not taking away housing stock either.” They say further that having the vacation home occupied year-round brings more ancillary income to the community.
Quite right! It seems to me it is very good idea. Completely with you I will agree.
No more thumbs down????
I’m taking a stab in the dark and guessing that whatever is decided in court next year won’t matter to these companies somehow. If 4 people purchase into the ownership, with the company owning at least part of it, there’s no rentals therefore no breach of the laws. That is a very simple way around the problem. Fractional Ownership, I like the idea.
from Outsider theory of Hawaii Affordable Housing…”Leveraging data from the Cato Institute, a nationwide analysis of median home prices and land-use restrictiveness yields results consistent with previous research that there is a statistically significant positive correlation between a state’s land-use restrictiveness and median home price. Moreover, the relationship between state median home prices and land-use restrictiveness is statistically stronger than the relationship between median home prices and the prevalence of out-of-state buyers”…Exactly what happened in California- it is 100% Difficult to build anything there because extreme environmentalists run the entire state & will not allow you to build due to “fill in the blank”…
We don’t want your ancillary income. Go away.
This reminded me of the Hawaii episode I just watched on “United Shades of America with W. Kamau Bell”. Here is an article about it with a clip from the show: cnn.com/2022/08/18/us/hawaii-tourism-impact-united-shades-cec/index.html. I found the Hawaii episode very disheartening, especially because of the idea being floated that maybe the best thing we can do for Hawaii is just not come any more. And then the Bezos thing, which seems inconsistent with keeping the islands fully Hawaiian. It’s discouraging for me as an annual visitor for 3 decades. How can I make things better? Would love to know if our editors have seen this and what they think? And if other readers have seen the show and have comments? Thank you.
Hi Glenna.
No we haven’t seen it but will check it out. Thanks.
Aloha.
I think what’s the difference You own part of a home you get to use or lease out part of the year, no different than a time share, instead of a week in a timeshare you get a longer amount of time to do what you want with. or you can continue to rent a hotel or condo.
This sounds awful. Turning a people’s home into one giant resort/playground for the wealthy. I visit frequently because I have family and friends who live in Hawaii. It’s a struggle. And now they will be competing with the uber rich who come to play for a month or so. I read a lot of complaints lately about the quality of service decreasing in the hotels—who do you think provides this? Where do they live? Schools in Hawaii are among the worst in the nation. Hawaii needs to be lifted up, not trodden down by a much of foreigners/out-of-staters who only see it as their private island(s).
Sorry–“bunch of foreigners/…” (I thought I used to be able to edit my comments.)
I doubt it’s the uber rich buying fractional share of anything, thats why the prices are low. Uber rich don’t need fractional shares of anything. The people that live and work in Hawaii can take advantage of all the programs and lower income homes/apartments that are specifically built and income qualifying for them, that population would never be purchasing luxury places. It is a total shame the State doesn’t invest in their schools, greedy politicians would rather see a rail to no where than invest in the kids, thats shameful
Aloha, are these fancy homes doing anything to lessen our critical housing shortage? Sounds to me like another scheme for those that have to make more and leave those less fortunate in the streets. In the streets where then those that have drive by and say look at those lazy people.
becareful, those people lounging in the streets will get a movement going and want your house, you look rich to them
You folks that think out-of-state buyers are responsible for the housing affordability crisis in Hawaii have it all wrong. You all are just parroting each other because it sounds good and it’s easy to blame others. For the real culprit, look no further than your own government, which you seem intent on continuing to vote into office, even though their policies are completely against your own interests. Legislative policies are the main reason why you can’t afford a house in Hawaii. Read here:
grassrootinstitute.org/wp-content/uploads/2022/08/The-‘outsider-theory-of-Hawaiis-housing-crisis.pdf
P.S. This study has the REAL data and statistics, not anecdotal bellyaching. You can’t argue with the facts.
it is Always all Local Politicians Selling their constituents down the river- It all Begins and Ends Locally…Affordable housing begins and ends with sensible policies that actually have the Best Interest of Local People in Mind and Not the latest Power and Money Grab by these so-called “for the people” liar$$$$….you get what you Vote for! Vote the same and Nothing will Ever Change!
Exactly.. the voters here believe their politicians, whoever has the best rhetoric, wins, and then they do nothing for their citizens.. They know the people that actually look into their backgrounds don’t live in Hawaii, and can’t vote here, so they pander to the week. Go chase all those short-term rental owners, they’re the issue here in Hawaii.. knowing full well the majority of property owners can’t vote here.. sad buying of votes
Anyone with any common sense recognizes this as a form of timeshare. On a different subject we very much miss the old Poipu. It used to be you could walk through the neighborhoods and all the homes were owned by locals. Now very few are owned by locals. Almost all are rentals now. The entire flavor of the neighborhood has changed. I miss things like the friendly cats and dogs we would see on our walks. And talking with local folks that you would meet on your walks. It just changes the environment of what Kauai used to be about. For us it is a sad thing.
While I travel to Hawaii, living in Nebraska, I did enjoy the locals instead of known tourists areas. Any flavor of old Hawaii has disappeared. Now, I find rude unhappy people, both in the locals and the tourists. The once great relaxing gentle paradise is all but gone. Tourists think they are entitled and the local work force is resentful, as I would be if it were me. I love Hawaii, the old Hawaii, not this unaffordable new version.
locals sold their homes for BIG $$.. and upgraded .. no one is immune to opportunity
In response to outrage from residents in Wailea, Maui, the umbrella Wailea Community Association passed an amendment to their covenants banning fractional ownership. These covenants are recorded on all properties in Wailea and run with the land. Any such multi-ownership transaction can encounter legal action. The community does not want their neighborhoods turned into transient vacation destinations.
As a resident and homeowner in Hawaii (and yes I moved from the mainland) limiting vacation rentals isn’t going to solve The home affordability crisis. The reality is that in any location across the country that is a desirable place to live, homes are more expensive. Those areas generally have more government regulation and oversight in land development. Those additional costs are shifted over to the buyer of the property. Specifically between 2008 and 2021, on average 76% of all home purchases were local buyers. Regarding the article, Maui is already enforcing new regulation on short term vacation rentals so I see this venture hitting a roadblock.
While it’s true that housing prices are soaring in most places, the fact that Hawaii is So desirable, it is racing ahead of other areas in affordability. If one has millions to spend, Hawaii will be high on their list of a desirable locations, even if it means seasonal living, higher COL, and/or frequent trips to the mainland. Most locals make compromises in order to live there. The wealthy do not need to be concerned about such matters.
Fractional ownership is nothing new. Pacaso’s business plan seems to be to make fractional ownership a lot more expensive in exchange for putting together your co-owners (who are strangers). Timeshares are the ultimate bad deal in fractional ownership.
Meanwhile Sedona is offering to pay Airbnb owners $3K – $10K to lease long term instead of short term:nypost.com/2022/08/22/arizona-city-to-pay-airbnb-hosts-10k-to-rent-longer-term/
According to the article, Summit Co. Colorado paid up to $20K
Let’s just make this simple. No one is not stupid enough to recognize that they are selling a timeshare to 4 owners of a private home. It is ridiculous and a loophole to once again bring more people to Maui who do not live here. And further increase more homes bought for non-residents.
It is insane and we need to stop this company in their tracks. Selling Maui to non-residents all for pure profit as they destroy our Island already that is over populated with tourist!
All us residents need to stand up to this kind of selfish greedy investing that only further hurts the local residents.And ruins our beautiful Island.No more BNB No more new hotels. We will fight this!!
I am with you 100% brother. But unfortunately our government sways easy when the mighty dollar is waved in front of them.
They have been selling us out for decades.
Exactly!!! Money & Power are powerful Motivators to sell out the people for their own interests. Be Careful who you Vote For and Remember All Politics is Local and All Locals will and are Affected by Local Governments who may or may not have Your best interest in Mind!
exactly! Always Follow the Money and you will see the roots of Unaffordable housing right before your eyes…
You can rent or buy that’s the choice here.. the decision to own or rent, doesn’t increase the amount of people coming here, it gives them an opportunity to stay longer for maybe less money than buying a place. It’s an opportunity to purchase in Hawaii for less money. I’m not for or against it. Bezo’s didn’t contribute to the politicians here for nothing..
I bought a condo in 2005.. that was 17 years ago, the payment was $3,000 a month to start with… over the years of increasing condo dues, property taxes, insurance and assessments for repairs.. its now $4,200 a month for that small condo.. you really really think thats affordable housing?
I do not understand why they want to price all the locals out? Companies cannot find housekeepers, maintenance staff, and other positions to support all these vacation rentals. Now they want to take even more housing so there will be less of us who can live here making for even higher staffing shortages? I just shake my head as my last, and best friend leaves island after 22 years because she can no longer afford her rent.
Nobody wants to price all the locals out. Your government is pricing all the locals out.
Sign of the times….Just like Zuckerberg, SWA and other big money enterprises from the mainland trying to come to Hawaii and throw their weight around to get what they can out of Hawaii and could care less about the overall impact it has.
Everyone is going to buy up Hawaii for short term rentals and it will price the locals right out of the island. Who in turn, will run excursions, luaus, and restaurants for mainlanders to eat at? It won’t be the locals as there won’t be any long term rentals for them, let alone an affordable house to buy. Hawaii needs to get it together and cap short term rentals forcing mainlanders to go back to the hotels for their vacations. VRBO was a great concept, but now it’s a huge money maker and it’s just substantially adding to the housing crisis in many States. Billionaires don’t care. They just throw money out to their fav politician or cause and they can get whatever they want. This is a big money maker for Bezos. Greed and power, so sad.
Aloha Rob and Jeff. I see you deleted the “thumbs down” symbol on your website. Hurrah;!!! Always the best for you both. Mahalo.
Hi Debra.
Good eye. Yes we did. Best regards.
Aloha.
Why would deleting a a thumbs down for opposing sentiment be a great thing? Why is there such fear or eagerness to hide opposition to changes that will severly impact affordability and tourism?
I agree. I respect Rob and Jeff and appreciate the work they put into their site but don’t think it’s bad to allow for difference in opinion if it’s done so respectfully. Lord knows my comments have received many thumbs down from tourists and I’m ok with that because everyone has been respectful in their counter arguments.
Hi Chris.
Thanks for your input on the thumbs. We had a lot of complaints and keeping civility on the anonymous internet is really challenging. There’s a much bigger story here, maybe for another time. Regards.
Aloha.
Short-term rentals aren’t allowed to be built anymore, at least on Maui. No one is “buying up all the short-term rentals”. Look to your own legislators for why housing is not affordable. Their policies and processes prevent affordable housing from being built.
grassrootinstitute.org/wp-content/uploads/2022/08/The-‘outsider-theory-of-Hawaiis-housing-crisis.pdf
Exactly! a Big Circle of Corruption= Big Tech/Money buying off Politicians for their own greedy purposes= Local people Suffer Greatly Unless you Vote out Politicians who do not Care about Locals & who only care about lining their own pockets (think insider trading “investment” opportunities countless members of Senate & Congress greedily partake in) All Politics is Local at the end of the Day, so Vote Wisely! My Dad use to work as a Congressional Liaison in DC under the Presidents Cabinet Chair for Opportunities for Spanish Speaking People-my Dad always told us that 80% of all Politicians are corrupt and only 20% care about everyday citizens…You want Affordable housing? Look carefully at people you vote for-Talk is cheap, Action is King
The people who wait tables, run the tours, etc., will be the ones who have mostly done this in the past–young, mostly singles. But when they want a family and a house, good schools, etc., they will move to the mainland. Like here, on the “9th island.”
you drank the koolaid. Thats why the big resorts pay their politicians to go chase the little guy condo owners and put them out of business, it’s worked in other states, short term rentals go away, then you get to pay $900 a night at a hotel.. in turn tourists go away, because only the rich can stay, meaning all those 17.42% taxes diminish and no jobs. don’t forget the short term condo’s also employ managers, cleaners etc. Condo short term rentals here incur $1500+ in condo dues a month and pay the highest property taxes, do you think that makes affordable housing? the mill rates on STR’s are higher than hotels.
The middle class is in a war for survival. The government and big business and big tech formed a cabal to control the wealth in the USA. The Federal Reserve bid the stock market to ridiculous levels. Now the stock market oligarchs are rapidly converting their paper wealth to real assets like food, land, and housing. Inflation is destroying the standard of living of the majority of citizens. Will Hawaiians be forced to pay all their income for housing? How will they afford food? This is the worst thing since WWII.
I cannot disagree with your assessment…Middle class must plan, prepare & come together to live together so as to afford housing, to Barter everyday items as needed, & to support All Local Farmers & grow as much as you can eg. Avoid Big Food, which owns, controls and manipulates the distribution of over-processed junk food- Read excellent analysis of Big Food Poison in book called “Hooked”-they get you on the Cheap, junk and your health goes=Big Pharma will then take over to help you…insidious circle of corruption….Anyways, I think the only way forward is to come together with like-mined family and friends and figure out how to afford what you can together…
Goodbye Hawaii… sad…all of the charm and aloha will quickly disappear… like Aspen, Jackson Hole and every other tourist Mecca where mega rich and famous push out the charm (Lanai is the most recent example