Rental Property - South Lake Tahoe
Brea, CA · Member since 2014 · 41 posts · 7 votes
I'm looking to possibly purchase a rental property in the South Lake Tahoe area (Near Heavenly preferably). I am fairly familiar with the area as my family has been vacationing there for over 20 years. I am in the very beginning stages of this venture (Heading up there in July for vacation and would like to take a look around at potential properties). I currently reside in Orange County, California. I am looking to spend around 300k-400k (3 bedrooms, 2 baths). My goal is to the keep the property occupied (Seasonal renters, etc.) as much as possible. I chose the price range as I would still be able to cover the costs in the event there is a lapse in renters. Just looking for any insight or fellow owners of South Lake Tahoe rentals. Thanks in advance for any information.
2016 : bought our 1st home in SLT= cash flows nicely. stayed there when it was not rented. made some good money
2017 : bought 2nd home in SLT= cash flows exceeds our expectation. vacationed in both homes. made great money.
2018 : open to more opportunities in SLT. now helping others manage their properties so they can make money.
I'm looking to possibly purchase a rental property in the South Lake Tahoe area (Near Heavenly preferably). I am fairly familiar with the area as my family has been vacationing there for over 20 years. I am in the very beginning stages of this venture (Heading up there in July for vacation and would like to take a look around at potential properties). I currently reside in Orange County, California. I am looking to spend around 300k-400k (3 bedrooms, 2 baths). My goal is to the keep the property occupied (Seasonal renters, etc.) as much as possible. I chose the price range as I would still be able to cover the costs in the event there is a lapse in renters. Just looking for any insight or fellow owners of South Lake Tahoe rentals. Thanks in advance for any information.
Hi Justin,
A lot of mortgage professionals out here in the Bay Area working for the same company as me own properties out in Lake Tahoe, because the financing is so good on them (& of course what do you think mortgage folks focus on first and foremost?). 90% LTV & a better interest rate than a normal rental, if you promise to use it on at least an annual basis. Can you handle being forced by an evil lender to vacation in Lake Tahoe once a year?
Tahoe is a multi-seasonal recreation area. Long term tenants (aka those working in the area are less interested) but the vacation tenants will abound - - and that hits your turnover costs. With you in Brea, you'll need a manager to prep for each new vacationer.
I would allocate a high vacancy factor in your evaluation. Basically you're into the STR problem of high returns WHEN rented but extended vacancies when not.
I'm thinking this venture is approximately 1 1/2 years out. Thanks for the advice; I will be looking this summer just to get an idea and feel for what is out there.
I agree with your evaluation regarding multi-seasonal and the possibility of having a high vacancy rate throughout the year. As I continue on with this possible rental property; I will definitely ensure I can accept the fact and afford the full mortgage when the property is vacant for months at a time. Thanks again.
Hi @Justin Brophy,
Good to see your post as I also start looking vacation rental in South Lake Tahoe area (especially Tahoe Keys area). I am totally new on vacation rental investment and not sure how difficult to get a positive cash flow on short term vacation rental in South Lake Tahoe with property management company handle everything (all of bookings and cleaning ...).
Hi @Chris Mason,
How lender evaluate loan on Tahoe vacation rental.
Hi @Matt Hoyt,
It'll be great if you can help elaborate. Any pitfall to avoid for new vacation rental investor? Thanks in advance.
Hi @Justin Brophy I own a 3/2 cabin in SLT/Tahoe Paradise area which pays for itself for a few years now and have quite a bit of feedback if you want to reach out directly.
I think you can certainly find something in the high end of your price range for 3/2 but I think you will see once you get out here that the 'experience' or specific area might not be exactly what you are looking for. You are likely going to want a more expensive 'turnkey' option as well since I doubt you want to have to manage a construction project and all the work involved with furnishing and getting systems setup remotely from SoCal.
I booked 199 days last year but that was what I would consider an anomaly. I would probably model your investment at a more conservative 150 days MAX for SLT as the last winter season was a little rough on rental revenue due to all the road closures and snow damage. As @Jeff B. mentioned you will most likely want full time management due to your lack of proximity to the area BUT I can recommend some alternative options as well for more of a hybrid model if you were interested.
Prices are at a peak right now (not because of last snow season however) but simply supply and demand and the overall housing market. That being said, after modeling dozens of properties up there it doesn't matter what cycle of the market you are in up there (unless you are investing solely for appreciation which I wouldn't suggest doing right now), it's really about rental and occupancy rates and how they align with whatever your investment goals are.
If you have some properties you would like me to plug into my VR calculator for Tahoe let me know I happy to provide whatever insight I can. It's been very rewarding to my family and I to have our property up there as it was always my dream as a kid to own a cabin in Tahoe and if I can help you make that happen as well it would be great!
Good luck to you and check out my profile, you might find some other info there that will help.
Cheers!
~Jon
Thank you very much for the informative reply. You hit on all of the points I was looking for in regards to feedback and guidance. I will be heading up to Tahoe here in about another month; I will be doing a bit of in-person research on the exact location and checking out some cabins in the area. Once I return, I would like to reach out to you and see what you think about the locations/properties I am interested in. This project is about 1.5 - 2 years out so I am just in the beginning stages. Thanks again.
Hi Justin,
My wife and I have had SLT on it radar for a long time, and bought a 2-1 (all we could afford with a small rehab budget) in our dream neighborhood in Al-Tahoe. We are going to vhr to help the mortgage, and plan to hold the property to keep a second residence in the area.
First off, prices follow with a delay the rest of the markets, but are climbing fast. Since most homes are second homes or vacation rentals, the market was lagging behind areas where primary homes dominate. We came in when the snow was on the ground and were able to make a below asking offer. Our realtor recently told us that now she is offering around 20k over asking, as prices have hiked. We found that good inventory moves within a few days. Houses at or under 300k have 10 plus offers, and the 200k range is dominated by contractors and developers.
The other big consideration in South Lake the City, is you have to apply for a vhr permit. This requirement began a few years ago and wasn't easy for us. As well, our max persons was reduced from what the City stated because of opposition at the hearing. I've heard the hotels and resorts are funding locals to go fight the vhr applications. Aapn after going through the process, I believe it. We had a ton of opposition, and all from people who didn't even live within the 300ft area around our house. The vhr permit has a 300$/yr fee, and is actively policed. There are bear box requirements, inspections, and best management practices for water run off, too.
My recommendation would be to carefully review the requirements and area covered by the City of South Lake before searching. You can still buy in the area, in El Dorado county, and not have the hassle, it all depends on where you want to be and what you're looking for.
I'm very happy this topic is here. I am also evaluating a rental property in South Lake, to hold forever. Lake Tahoe is one of my favorite places on Earth and would love to have a place there for my family for many years to come. @Jon Crosby I'd love to connect with you on some of your models. I'm also curious how the New VHR limit will impact things. Does anyone know how long it takes to get one of these permits today? I suspect that timeline will go up once this rule goes into effect, and it would be important to factor that into the initial vacancy timeline while the permit processes. Thanks all for your comments and being active in here.
Hi @Mike Forney, I'm actually in the county so the permit limits do not affect me (yet), as my permit comes from the county assessor. I watched about 3 hours of the last South Lake town hall meeting on the subject and boy, was it eye opening! (http://www.cityofslt.us/index.aspx?NID=84) Just fast forward until you get the STR stuff.
Feel free to reach out directly and I can share some insights and models and answer any other questions you might have about the area. I'm certainly not an expert but might be able to answer some questions for you that might help out.
Cheers!
~Jon
South Lake Tahoe vacation rentals should generally be modeled at 100 days per year. Many people self manage and achieve 200+ days a year but that is after a couple years usually.
The statements about long term not being viable or relevant are completely wrong. Right now there is more competition to rent a regular house long term than there usually is on real estate transactions. Prices for rentals have skyrocketed in the last 2-3 year’s and there is still a shortage of long term rentals overall. The new VHR ordinances are trying to balance long term vs short term rentals within city limits but for now the county and administrative zones within city limits are probably the best targets for vacation rental purchases.
Really glad this topic came up as my wife and I are actively looking to purchase our first income property out in SLT. Love all the information that everyone has provided so far out here.
With the new approval process that must take place, that adds a new spin to things, but is it also true that if you own a rental, either long term or short term, that you have to have your primary residence within a certain mile range, and if you don't, you have to get a PM?
We were thinking of doing more LTR to try and cater to the housing shortage that exists there. Met with some local establishment owners who are dying to get some housing for their employees and would partner with me to buy up some options.
We'll be out there mid December to ski and check out some properties
2016 : bought our 1st home in SLT= cash flows nicely. stayed there when it was not rented. made some good money
2017 : bought 2nd home in SLT= cash flows exceeds our expectation. vacationed in both homes. made great money.
2018 : open to more opportunities in SLT. now helping others manage their properties so they can make money.
Following thread..all great stuff!
Just spoke with a realtor who also manages properties for investors, he said theres no way to cover any kind of mortgage through short term rentals and would be lucky to cover taxes, hoa, and some other expenses.