Ember Home Joins The Party To Disrupt The Vacation Home Market
Property technology — otherwise known as “proptech”- applies information technology and platform economics to commercial and private real estate markets. Pacaso made a name for itself in the proptech space when it launched in October 2020. Founded by Zillow alums Spencer Rascoff and Austin Allison, Pacaso is a property broker that essentially buys single-family homes and then sells them to a small group of buyers, usually 8. Pacaso achieved a $1 billion valuation with a $75 million Series B funding in March 2021.
The company is about to get some intense competition from Ember, a Salt Lake City, Utah-based startup. Ember has an impressive investor pedigree, with legendary entrepreneur and venture capitalist Peter Thiel (and co-founder of PayPal) and a group of other backers providing $17.4 million in financing. The “other” backers are equally notable: Curt Doman (founder of Progressive Leasing), Todd Pedersen (founder and former CEO of Vivint Smart Homes) and Ryan Woodley (former CEO of Progressive Leasing). Not too shabby.
How does Ember work?
Ember’s business model, similar to Pacaso, is deceptively simple: sell 1/8 shares of luxury vacation homes in prime locations to lower individual ownership costs. Homes are owned by a “property-specific” LLC (Limited Liability Company) with a unique banking account and tax identification number. Ember manages properties on behalf of the owners, which are allocated in eight to twelve shares. The property management element is vital because it allows vacation homeownership to be positioned in a worry-free manner: repairs, maintenance and cleaning are factored into monthly payments.
Ember’s value proposition capitalizes on the realization that most vacation homeowners don’t use their property for more than 30 days per year. With Ember, shares could be purchased from $100,000 to $500,000 for properties that range in pricing from $1.5 million to $5 million, which would generally be outside the range of many average income individuals if the property had to be purchased by a single person. Ember has also committed to making consumer financing available later in 2022 through its Ember platform.
Ember facilitates property ownership of single-family vacation homes in trendy geographic locations. But it’s important to recognize that Ember co-ownership is not a timeshare as potential homeowners are vetted to collectively own the property. Ember co-owners enjoy all the benefits of conventional homeownership: appreciation in property valuation, as well as deductibility of mortgage interest and state and local property taxes. In a one-eighth ownership scenario, each property co-owner would exclusively have access to the home for up to 45 nights per year, and dates can be reserved as much as two years in advance.
Central to Ember’s value proposition is the Ember mobile app, which utilizes a proprietary scheduling algorithm to safeguard that co-owners have fair opportunities to experience the property. The Ember mobile app and its website can be used by buyers and owners to peruse vacation properties for sale, view, and pay expenses. Recognizing the criticality of providing and maintaining a luxury experience at its properties, Ember provides an in-market “Ember Concierge” capability to keep homeowners focused on enjoying their property rather than wasting time on maintaining the home.
My podcast with Ember’s CEO and CXO
Last week, I had the opportunity to host Ember’s CEO and CXO (Chief Experience Officer), Kurt Avarell, and Jeff Lyman, on my SmartTechCheck podcast. During the podcast, Avarell discussed the origins of the Ember concept, which grew out of his personal experience co-owning a houseboat with friends on Utah’s Lake Powell. Avarell began to recognize that many families strongly desired vacation homes, but the affordability challenges made it an impossible dream for most.
During the podcast, Lyman and Avarell lay out the four core strategic elements of Ember’s strategy: (1) building and/or building high-end, professionally designed vacation homes in premium locations; (2) producing an LLC approach so that the home could be purchased in a co-owned “share” orientation; (3) streamlining vacation home ownership by removing the challenges with owning a second home by providing concierge management services; and (4) widening the accessibility of vacation homeownership to the mainstream.
Currently, Ember has a small number of listings in just five states: Utah, Oregon, New Mexico, Texas and California. Recognizing that a large amount of inventory in desirable locations will be on the critical path to Ember’s success, both Avarell and Lyman emphasized that the company is quickly expanding, focusing on 20 markets in 10 states.
Like all new business model concepts that markets find attractive, competition will increase, and that’s always a good thing. From a macro standpoint, the co-ownership approach is welcome, given the less-than-positive reputation that timesharing has with many people. Education and superior marketing messaging will be critical elements so that the co-ownership model is not unfairly maligned out of the gate. Ultimately, the success of Pacaso and Ember will be derived by the quantity and quality of their inventory, and a quick perusal of Ember’s website indicates some promising (if modest) potential. In that context, Ember is playing an essential role in dramatically disrupting the vacation home market by making it more accessible, affordable and convenient.
Mark Vena is the CEO and Principal Analyst at SmartTech Research based in Silicon Valley. As a technology industry veteran for over 25 years, Mark covers many consumer tech topics, including PCs, smartphones, smart home, connected health, security, PC and console gaming, and streaming entertainment solutions. Mark has held senior marketing and business leadership positions at Compaq, Dell, Alienware, Synaptics, Sling Media and Neato Robotics. Mark has appeared on CNBC, NBC News, ABC News, Business Today, The Discovery Channel and other media outlets. Mark’s analysis and commentary have appeared on Forbes.com and other well-known business news and research sites. His comments about the consumer tech space have repeatedly appeared in The Wall Street Journal, The New York Times, USA Today, TechNewsWorld and other news publications.
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