Pacaso, founded by former Zillow executive Austin Allison, is revolutionizing second-home ownership by letting you buy just a fraction (as little as one-eighth) of luxury properties in places like Aspen and Napa.The concept addresses a simple reality: most vacation homes sit empty 80-90% of the year.

I’m Abraham, a Fractional CFO working with real estate investors to organize their books and make sense of their financial statements.

He's our fractional TIC program manager.

That’s why many sponsors offer TIC or DST versions specifically for 1031 investors—because those count as direct interests in real property when they’re set up correctly.If you go this route, think of it like trading fee title in your house for fractional fee title (TIC) or a beneficial interest in a trust that holds the property (DST).

The easiest path—both for your initial purchase and for future resale—is fractional TIC financing, where each co-owner has their own loan secured only by their share and the exclusive-use rights to their unit.

No, it's not possible to combine them, and furthermore, there's no need to.A TIC is an undivided direct fractional interest in a piece of property.When an LLC is formed and assets are contributed into the LLC, the owners of the LLC generally have an undivided fractional interest in the assets of the LLC by virtue of their ownership of the LLC units.If this is a large investment, it may be worth your time to speak with an attorney who can help you make the decision and draft the operating agreement if that is the most advantageous path.

In a TIC, each owner holds an undivided, fractional interest directly on the deed, which typically allows you to take depreciation and complete 1031 exchanges in proportion to your percentage.

Also, remember that your 1031 rules don’t change just because the replacement property is fractional: each exchanger has to replace equal or greater value and equal or greater debt, or add cash to cover any shortfall.

The right tenant segment keeps income steady, and with an experienced local team, my time commitment stays low.Advantages (when I invest in the right city)Inflation-adjusted rent growth can exceed inflation, lifting my standard of living over timeI need a fraction of the capital required by pure accumulation strategiesIncome can last for life and continue for heirsPerformance is driven by supply and demand, not daily sentimentDisadvantagesReal estate is not liquidMarket and tenant selection are critical, though the process is straightforwardEntry costs are higher, often about $140,000 cash plus a mortgage in Las VegasBottom line: stocks are for building a pile, real estate is for building an income stream.

Be careful with pre- or post-exchange cash-outs, related-party loans, or refinancing timed too close to the exchange.7) Practical deal points.Lender & consents: TIC conversions almost always require lender approval; fractional ownership can trigger tighter reserves and covenants.Governance: Use TIC and property management agreements that avoid centralized, partnership-like control and keep voting rights balanced with true co-tenancy.Securities overlay: Syndicating TIC or DST interests can implicate securities rules—coordinate with counsel early.UPREIT vs. 1031: Rolling into an UPREIT via §721 units is a different deferral path with its own pros/cons.Common pathways that work:All-in exchange: The LP/LLC sells and that same entity acquires the replacement; cleanest when everyone’s aligned.Pre-sale TIC carve-out: Those who want autonomy receive deeded TIC/SMLLC interests well before closing, then 1031 independently; the rest exchange inside the entity.DST replacement: The entity or the separated TIC owners exchange into one or more DSTs for diversification and smoother financing.If you share a few specifics—entity type, state, lender requirements, member goals, leverage, and target closing date—we can map a timeline (including any seasoning), model the boot/debt requirements, and choose between same-entity exchange, pre-sale TIC carve-out, or DSTs with confidence.Jason — appreciate the CPA perspective and I agree on the basics.