A lake town adjoining the Sierra Nevada mountain range, Lake Tahoe boasts a clear blue lake, snowy mountains, and alpine forests. A truly unique location, it is renowned for its choice of sights and activities all year round, attracting approximately 15 million visitors each year. It also boasts affordable property prices compared to other parts of California. All reasons that make Lake Tahoe a great place to consider buying an Airbnb vacation rental.
A mountain-lake-ski town offering beauty, serenity, adventure, and nightlife, it is no surprise that Lake Tahoe has been recognized as one of the best lake towns, ski destinations, and overall travel destinations in the US and the world. (Check out our guide to targeting international travelers to your Airbnb.) Visitors can hike mountain trails in Tahoe City, bask on the beautiful beaches in South Lake Tahoe, ski down the slopes of Squaw Valley, shop for unique souvenirs in Truckee, or sample gourmet cuisine in Incline Village. There is also water sports including jet-skiing, parasailing, boating, and rafting during the summer months as well as cycling, bungee jumping, and hang gliding. And when tourists want to take a break from cross-country skiing at their chosen level of difficulty in the winter, there’s always snowboarding, ice skating, or winter hiking through the snow-coated Sierra Nevada mountains. Lake Tahoe also offers a fantastic nightlife scene through its variety of casinos on the Nevada side of the lake. Visitors can choose from modern casinos with neon lights, Old West-type saloons, edgy nightclubs, and rock ‘n’ roll bars.
Lake Tahoe is also easily accessible to residents in California and Nevada, offering them a different experience from the rest of their state, and provides tourists from further afar easy access to big cities like Los Angeles, San Francisco, and Las Vegas while based in Lake Tahoe. It is an attractive destination to couples, families, and friend groups and enjoys a high percentage of return visitors.
The global pandemic saw many couples and families with the necessary savings buy homes in vacation destinations including Lake Tahoe and move out of their homes in cities and suburbs. This blew up the housing market sending prices skyrocketing and lowering inventory. As the vaccination program continues to roll on and children return to in-person schooling however, the average price of a house has decreased from a record high of $1.89 million in early 2021.
According to Redfin, a full-service real estate brokerage, the current housing market in Lake Tahoe is somewhat competitive. The average selling price of a house is $883,000 at 4.2% over the listing price. This accounts for an average of $564 per square foot of space. Meanwhile, the average down payment expected is 21.5%.
As many of these new homeowners return to their original homes it is expected that many will hold on to their properties for at least a few years as holiday homes. This however also presents an opportunity for those looking to list property on Airbnb using the rental arbitrage model.
Lake Tahoe occupies a large area even without accounting for the size of the lake. In keeping with its broad offering to visitors through the seasons, its neighborhoods have their own distinctive vibe and scenery.
The largest town on the lake, South Lake Tahoe is the best representation of the diversity of offerings that Lake Tahoe provides visitors. Tourists can enjoy a variety of dining options, a bustling nightlife, the sandy beaches of the lake, boat rides on the clear blue waters, and easy access to mountain activities like skiing and snowboarding.
According to AirDNA, the world’s leading provider of vacation rental data and analytics, South Lake Tahoe is one of the top 10 large US cities to invest in a vacation rental with an annual earning potential of $62,187 when listed on Airbnb.
In July 2021, vacation rentals in South Lake Tahoe enjoyed an average daily rate of $470, occupancy of 94%, and average revenue of $9,235. Of the over 2,500 active rentals, 92% were entire homes with 2-4 bedroom spaces being the most popular. Forty-percent of vacation rentals came equipped with a hot tub while 20% had a swimming pool.
Most dwellings found in South Lake Tahoe are condos with high-end townhouse units with lake views set to come up soon. Homes with lakefront views are pricier than those further away.
The average home price in South Lake Tahoe in August 2021 was $685,000 with an average downpayment of 20% and 80 homes sold.
Truckee is a picturesque country-style mountain town on the north shore of the lake. It is a popular destination for visitors looking to enjoy the mountain sights and experiences of Lake Tahoe without lodging in a ski-in ski-out accommodation or being far from the lake. Its historical downtown area, lined with brick buildings, offers a plethora of restaurants, bars, and shopping options. During summer events, the street is closed down and local vendors sell art, jewelry, clothing, and handmade goods.
Counting 1,196 active rentals, Truckee averaged a daily rate of $449, occupancy of 90%, and average revenue of $8,780 in July 2021. Nearly all vacation rentals were entire homes with the most popular being those with 3-4 bedrooms. Most guests stayed 2-3 nights.
In August 2021 the median price of a home in Truckee was $1 million. On average homes sold faster but fewer homes sold overall from the same month in 2020.
Situated in the Nevada side of Lake Tahoe, Incline Village is an adventure paradise with a country club feel. Visitors can enjoy ski runs down Diamond Peak, challenging hikes, and mountain biking down the Flume Trail, as well as a golf course and serene beaches.
Incline Village enjoyed an ADR of $464, occupancy of 93%, and average revenue of $8,418 in July 2021. Entire homes with 2-4 bedrooms were the most popular and accounted for 98% of 722 active rentals.
House prices were down nearly 16% in August 2021 compared to the previous year, selling for a median price of $870,000. However, only 15 homes were sold in August this year.
Short-term vacation rentals are generally defined as entire units or rooms that are rented for up to 30 days at a time in the Lake Tahoe region and incur a transient occupancy tax.
Many cities in the region have recently taken steps to regulate vacation rentals and rein in issues such as noise, litter, and illegal parking, which are the most common complaints received against them.
Placer County for example has created a database of its 3,500 rental properties including the maximum number of occupants and vehicles allowed at each for when officers respond to complaints. And because many owners do not reside at the properties, the county requires a nearby resident contact to be named to handle disputes and respond within an hour of a complaint. The county will be appointing two full-time compliance officers as well as two administrators to ensure compliance.
Meanwhile, an ordinance known as Measure T that was enacted in December 2020 in South Lake Tahoe aims to restrict the total number of vacation rental permits given out in the city with the exception of the Tourist Core and commercial zone parcels. Property managers can still apply for permits in the other areas but will be put on a waiting list and evaluated over more stringent criteria. Buyers who are waiting are in the meantime renting out their homes as seasonal rentals for three months in the summer and winter. Permanent residents will be able to get a permit to rent out their homes for up to 30 days per year. The ordinance also allows for individual rooms within a home to be rented out with up to six guests to be accommodated in each property once the pandemic restrictions are lifted. However, the significant decrease in transient occupancy tax collection may soon result in the local government amending or throwing out Measure T altogether.
There are other factors to consider besides price and revenue potential when choosing which Airbnb vacation rental property to buy in Lake Tahoe. Everything from the amount of snow, the bear population, and fire safety can have a considerable impact on your business.