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- I'm Back
I’m back! I’m going to start writing again and am excited to share updates on my project!
Over the next few months, I’ll be giving updates on a bunch of things. I haven’t written one of these letters in over 4 months. I will share more details about our progress on the site and model home! We have had some crazy experiences in Costa Rica that I’m excited to talk about in retrospect.
I know many of you have followed along because you’re simply interested in purchasing one of my homes. If that is you, then know that at the bottom of this email, I am offering the best opportunity to buy into the project today, and there is limited availability! I am giving a great deal to people who are willing to risk being one of my first 32 customers. The information on this will be at the end of the email.
Today, I want to talk about the progress we have made toward our goal of setting up co-ownership for our community.
The last email I sent back in June highlighted my belief that the best route for our community would be to set up an opportunity for people to purchase the home with other families who would share it, so that someone can have the benefits of 2nd-home ownership without many of the downsides.
As I’ve dug into the idea, I’ve realized that dozens of companies have emerged over the last 5 years to facilitate this type of home ownership.
It’s left me trying to understand why this industry is gaining momentum today, and I believe I am starting to grasp why.
Let me start by explaining what co-ownership is all about.
Second home ownership has been a thing for wealthy people for centuries, if not for as long as organized society. It’s natural to want a familiar place to bring your family where you can build memories together, away from normal day-to-day activities.
Often, these homes are nestled in locations that offer something that your primary home does not. This might be more open space or access to recreation like skiing or boating. It might be about getting to a warmer climate or to a city with more fun.
The privilege of second-home ownership has always been for the wealthy, as it comes with an enormous cost for something that is purely for enjoyment and is often used for a tiny fraction of the time it could be.
Co-ownership is a way for a few families to split the home, making it more efficient and, in turn, much more affordable.
The best comparison I can make is a country club. I’m an avid golfer and have really enjoyed joining a club recently. Although I would never have purchased equity in the club for investment purposes, it is a significant component of the membership.
To someone who isn’t familiar with how the standard country club works. You purchase equity in a golf course with some amenities and co-own the course with the other members. Then you hire management to run the facilities.
As a golfer, it’s been awesome to be able to have a golf course with management that’s not focused on profit but is instead focused on generating the best experience possible. Although the dues are high, the equity growth to this point has actually outpaced the dues.
I wouldn’t advise spending 100K on a club membership with a 500K net worth, as the investment wouldn’t make sense, but as you start to get a net worth into multiple 7 figures, it starts to make sense. It’s something I get to enjoy regularly with my family, and having the barrier of ownership creates a higher-quality experience.
Co-owning a vacation home is similar, where you have a manager in place to make your experience as seamless as possible and still get the benefits of price appreciation on your shares.
The obvious problem with co-ownership in vacation homes is that it adds an extra layer of complexity, as there are now multiple owners to manage.
As I’ve spent time learning more about co-ownership, there have been 2 companies that are front running, scaling the concept.
Pacaso Homes
Ember Homes
Pacaso recently raised another $50M to continue expanding its business (this money is not to purchase homes but for expanding the co-ownership business). I was one of the investors, which allowed me to attend their calls and gain a better understanding of their long-term growth plan.
They are focused on the really high-end market, where homes are often valued at more than $10 million. They are also focused on expanding their international footprint as many of their customers are requesting access to foreign markets. (I’m tempted to spend more time talking about this, but will save it for another day)
Pacaso doesn’t offer the option to rent your home, so there is no way to offset your fees other than through appreciation over time.
Ember (backed by Peter Thiel) is also focused on higher-end homes; they have a broader range of options under 10 million. They also haven’t gone international yet. From what I can tell, Ember is focused more on the management experience, which has led them to cluster homes more aggressively in certain areas, allowing them to offer better management at lower costs.
Ember has also opened the possibility of renting certain homes, allowing people to generate income when they aren’t visiting their homes.
As I’ve researched the industry, I’m very bullish on both of these companies, as I believe there is a much larger market than these co-ownership companies currently offer. I believe they have dialed in the management process, which is the sticking point for expanding co-ownership to new customers.
There is a lot to learn about co-ownership, and if you want to learn more, I would suggest visiting either of these companies' websites, where they have great information on how owning one of these homes works, including scheduling, their software, and answers to many other obvious questions.
Now, back to the question of why I think this concept is booming today. I would say there are 3 reasons, with the 3rd being the most important.
#1 Tech has enabled management
Software has been able to do what’s necessary to make this work for a couple of decades now, but it’s only in the last decade that older people have been confident enough to navigate it (Covid accelerated this). People have become very accustomed to using their phones for nearly everything, and scheduling their stays inside an app is expected and easy. This easy tech lets people co-own a home seamlessly without even interacting with other homeowners.
#2 Airbnb has changed travel expectations
For years, most travel was based on condo experiences with shared amenities. With the introduction of Airbnb, people have become accustomed to traveling with access to private pools and hot tubs, full-blown kitchens, garages, exclusive BBQs, multiple bedrooms, etc.
#3 There is more abundance today than at any time in history
Remember how I said that 2nd homeownership was a luxury of the very wealthy. For most of human history, the idea of second homeownership was basically out of reach for nearly anybody.
Today, Baby Boomers wealth dwarfs any generation in history. As of 2023, there are over 7.5 million baby boomers with a net worth of $3 million or more, and none of them have a lot of time left to spend it.
It’s easy to see why baby boomers may want to take a slice of their wealth and allocate it to something that will still appreciate over time but enable them to enjoy it with their families.
As you can see, I’m bullish on Co-Ownership, so I am committed to moving forward with it as our method for selling our property.
Let me explain how I am selling the homes in the subdivision.
I have set start and completion dates for the first 4 homes. I have set up each home to be broken into 8 individual pieces. These homes will be sold through U.S. LLCs that have full ownership of the individually titled homes.
My group will remain managers of the LLC with no ownership, who can be fired and replaced if we are unable to live up to the duties we are committing to as managers of the homes. This is identical to how both Pacaso and Ember structure their management.
I decided to sell our first 4 homes (32 pieces total) below the cost of building and furnishing the homes. This is the pricing for the first 4 homes.
I am willing to sell all 8 shares at the pre-construction price to anyone who is on this email list for these first 4 homes, which is below the cost to build and furnish the homes. Anyone can purchase up to 4 shares in one home.
Here is how the sales process works if you’re interested.
I am currently collecting reservations at a $250 refundable deposit per share.
This will place you in the queue to schedule a call with my partner, Kincaid, who will walk you through the process of placing a reservation for the home you prefer.
At this point, you would be required to put $5000 down and have a 45-day period to schedule a visit. If you visit the site during your due diligence, you will receive a full refund if you decide not to move forward.
By being willing to be one of my first customers, I’ve wanted to ensure you get the best possible experience. Anyone who purchases one of the first 32 shares will also have a first right of refusal (in order of purchase) on any of the other shares on future homes, ensuring you can get your preferred home in the development.
I’ve currently collected 17 total reservations since releasing this a couple of weeks ago to friends and family, and so I have 15 left. It will be first-come, first-served on these last 15 shares. If anyone has any questions, please feel free to reach out.
I am going to be very responsive to emails over the next few days. If I am not responding to your emails, please DM me on X as I have had issues with email responses in the past.
You can reserve here:
When looking through the floor plans on the website, keep a couple of things in mind. These homes will be professionally furnished and decorated, but the renderings do not exactly represent the end interior design. Also, the 3 and 4-bed floor plans are accurate, but the 5-bed is not. We are changing it to what we believe will be a superior plan. We don’t currently have renderings for the 6-bed plan on the website.
You may be asking why I am willing to sell the shares below cost. I am doing this for several reasons. Here are the biggest:
Your experience may be a bit clunky at first. We have a brand-new app that needs to work out the kinks. We are also inexperienced in managing hospitality, and so it will take us a bit to get the hang of things. I want the people who go through this to get a good price.
I believe most sales will come through people already visiting the area who fall in love with Playa Negra and our site. If we have the momentum of 4 homes already built and sold, I think it will help propel sales.
Although our total cost is above the sales price, I will still receive some of the money that went into the land and infrastructure. I can use that to pay down our debts and take the edge off for myself.
I am looking forward to sending updates again through email. Below are the links for Ember and Pacaso for anyone interested in learning more about co-ownership. The Ember 'How It Works' videos are particularly good at explaining the concept.