STR in Lake Tahoe - Northstar

[Richard Goore]

Investment Info:

Condo buy & hold investment.

Purchase price: $540,000
Cash invested: $30,000

Purchased as a rental for a 6 month period then converted it to a STR. After the 6 month term was up, we did a complete remodel of the unit. All the work was completed by my partner and myself, along with assistance from our families. The only thing we contracted out for was the counter tops and flooring. We completely changed the layout of the kitchen but kept the loft overhead as a feature of the unit. The property is now a STR with high rental activity.

What made you interested in investing in this type of deal?

We wanted to try to find something to rent as a STR in the Tahoe area that we could put in "sweat equity" to so if it didn't work out as a STR we could always sell and most likely come out ahead.

How did you find this deal and how did you negotiate it?

As an agent, I started looking on the MLS. This was the beginning of the pandemic so it seemed like half of Northern CA was up in Tahoe looking for pandemic purchases.

How did you finance this deal?

This was an all cash purchase. We used cash on hand as well as tapped our life insurance policies. We had to pay interest but it goes back into the cash values of the policy so the cost of doing this is very small. After remodeling the entire unit we were able to do a cash out refi and pull almost all of our money out.

How did you add value to the deal?

We completely remodeled the entire unit - brand new kitchen, new flooring throughout, mostly new bathrooms (left bathtubs, but replaced everything else (including the 30 y.o. carpet in the bathrooms). We retiled the fire place surround, oiled and conditioned all the wood paneled walls, and replaced all lighting fixtures.

What was the outcome?

We began renting the unit as a STR in July of 2021. Based on research of the local market we conservatively estimated rental days per year at 110 days, or 35%, and an average nightly rental rate of $300 for the year. Starting in July we had half the year of 2021, and we beat our estimates for that period. For the full year of 2022, we were at a 54% occupancy for the year and averaged $402 per night.

Lessons learned? Challenges?

It's been a great learning experience overall. By doing the work ourselves we saved a ton of $$$. This would happen in general but even more so in the Lake Tahoe area. Through strategic planning, we were able to finish the remodel on time and under budget. It pays to work with great partners who share the workload and have differing expertise. That being said, I learned I don't want to do an out of town remodel by ourselves ever again.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, ME!