Realtor · South Lake Tahoe, CA · Member since 2020 · 18 posts · 1 vote
Looking at purchasing an investment property. I just flipped a project on the Oregon Coast and looking at transferring some profits into another rental in the Carson City, Reno, Gardnerville, or Lake Tahoe area where I currently have a few rentals and live full time. I've looked at a few rehab properties that need a lot of work and seemed to be priced high for the work that needs to be done, i.e. new plumbing, electric, foundation. Is anybody else having this experience? Should I branch outside of my local area? May be interested in a turn key vacation rental out of state, anybody else doing this? Maybe Florida? Baja? Would love to hear your thoughts and ideas and what you all are doing.
@Orion Izzard trust your gut. $525k for a 1bed that's only pulling in $40k will not have good numbers. The PITI alone will eat almost all of your revenue before factoring in costs to run your STR business. Unfortunately South Lake Tahoe has clamped down on STRs and the only area around the lake that will allow them is Incline Village (but good luck finding decent pricing there).
I'd suggest looking into other cheaper markets like Florida if you want to get into the STR game. It's not that hard to self-manage from out-of-state, so if you need advice going down this path feel free to DM me. Good luck!
Prices have definitely gone up over the last couple years. We are seeing higher prices even on properties that need work. Of course, in Lake Tahoe, rents have also gone up. Sometimes it can still be a deal if you can get the rents you want after putting the work in. It’s pretty slim inventory at the moment but keep watching and I expect to see more options as spring approaches.
Those prices have gone very high because they are guaranteed STR eligible. Small units like that tend to gross $30-40k. Private beach, pools, tennis courts, close to everything. Hard to ask for a lot more from a vacation rental in South Lake Tahoe. That same unit was probably around $450k last year before the county hit their permit cap and made everyone start looking at Lakeland Village.
@Orion Izzard trust your gut. $525k for a 1bed that's only pulling in $40k will not have good numbers. The PITI alone will eat almost all of your revenue before factoring in costs to run your STR business. Unfortunately South Lake Tahoe has clamped down on STRs and the only area around the lake that will allow them is Incline Village (but good luck finding decent pricing there).
I'd suggest looking into other cheaper markets like Florida if you want to get into the STR game. It's not that hard to self-manage from out-of-state, so if you need advice going down this path feel free to DM me. Good luck!
I'd love to get more info on managing out of state rentals. I had a condo in Incline which I stupidly sold... but purchased a few properties in the South Shore which we live in and short term, as shared space. I almost purchased a rental in St. Augustine in Florida but decided on the Oregon Coast which we've done well on. Looking at next steps. I DM'ed you to hopefully pick your brain.
I'm in the Austin market and I see the same issue. You really have to buy the property at a deep discount to turn a profit on them. Unfortunately wholesalers in my area have driven the cost of deals so high that each deal now has almost no meat left on the bone. I would try looking for off market deals (maybe for sale by owners). Maybe try looking further out. Lots of my investors that were buying in Austin now have switched to buying in Killeen which is about a 1 hour drive from the city. Less competition out there and lower purchase prices. These are just my thoughts on the topic.