I'm leaning towards selling before I need to dump a bunch of money into the property, but I'm second guessing myself because I'm sitting at a 3.25% interest rate and cash flowing close to $1,000/month before reserves. 

I've met his kids who are in there 40s and I've spoke with people where he banks at to confirm income since he is retired and they spoke highly of him.

I cannot confirm this is why I turned to BP members who are experienced.This happened a week ago. 

Some cons investing in Tahoe :- the reservation ratio are not that high as supply is abundant- the limited number of STR permit makes them challenging as we can only invest in certain geographical location.If I really have to buy in South Lake Tahoe I would just buy single family, rent it as LTR, and then I place an RV or buy only house with ADU so I don't need to deal with STR-crap LOL....

If these are new builds, there is probably less maintenance, less need for large CapEx reserves right now, and if the rent is covering the mortgage, you're in a great spot.

So, if you can budget for maintenance and maintain adequate reserves, you will be much better off in the long run skipping purchased warranties. 

Interest reserve and lender private mortgage insurance are always secured before closing.

Then again, I guess no one is ever really “ready” to jump into real estate, but I would definitely feel more comfortable with reserves in place

Not any different really from BRRRRR (I add the 5th R for "reserves"); sometimes and some houses it is difficult to make it work but you can usually make adjustments that will pencil, such as leaving some equity behind. 

A portion of it to reserve for refinancing and most of it to pay off credit cards and prior debt.