Visited by more than 15 Million people each year, Lake Tahoe is one of the most prominent tourist attractions in the USA. Platforms like Airbnb allow homeowners to list their houses as short-term vacation rentals, and from there, people can easily book the homes and stay there. Airbnb is playing a significant role in connecting people with these vacation rentals. Many people nowadays are investing in second homes in Lake Tahoe, thinking Airbnb can finance them, but is it possible to finance a second home with Airbnb in Lake Tahoe? Yes, it is, but there are details you need to know. 

Paying a Second Home by doing Airbnb in Lake Tahoe

In short, Yes! You can pay for your second home with Airbnb, but it’s not this simple; let’s understand it in detail: 

Understanding Airbnb as a source of passive income:

Airbnb has become a popular platform for generating passive income by renting properties to short-term guests. Here’s how it works as a source of passive income:

  • Anyone who owns or rents a home, apartment, or even a spare room can list it on Airbnb, creating an additional revenue stream needed for a full-scale business setup.
  • Hosts have complete control over when and how often they rent their property. This allows flexibility in availability, pricing, and managing guest stays.
  • In tourist hotspots or popular destinations, short-term rental rates are often higher than traditional long-term rentals. For example, renting out a property in Lake Tahoe during ski season or summer can generate significantly more than long-term leasing.
  • Airbnb handles much of the operational side, from marketing and listing to guest communication and payment processing. This reduces the workload for hosts, making it more passive than managing traditional rental properties.
  • Hosts can automate many aspects of running their Airbnb, such as scheduling cleaners, setting automatic pricing, and using smart locks for self-check-in. This minimizes the time required to manage the property.
  • Hosting on Airbnb allows homeowners to diversify their income, which can help pay for mortgage costs, property maintenance, or other expenses. For some, it becomes a primary source of income, while others use it to supplement their day job or retirement savings.

Average rental rates and occupancy in Lake Tahoe:

Lake Tahoe has 2 peak seasons, winter and summer. Most visitors visit Lake Tahoe in these 2 seasons, and rental rates and occupancy change when the demand increases and decreases. 

According to the data from our vacation rental company, the average rental rate in peak season is around $400/night, and in shoulder seasons, it’s around $300/night. During peak seasons, the occupancy rate is around 60%, and during shoulder seasons, the occupancy rate is around 40%.

Income needed to cover a second home’s mortgage and expenses:

If you buy a second house in Lake Tahoe for $1 Million, the mortgage will be around $4,300, and other costs like property taxes and insurance can go up to $5,000.

So, to cover a second home’s mortgage and expenses, you need to make around $5,000 from Airbnb monthly. 

Challenges and factors that affect consistent Airbnb income in Lake Tahoe:

Here are some challenges that can affect consistent Airbnb income: 

Seasonality: 

As Lake Tahoe has 2 peak seasons, winter and summer, more people visit Lake Tahoe in winter and summer instead of other seasons. This means your income might be affected by the seasons; you will get more bookings in peak seasons and generate more revenue than shoulder seasons. 

Location:

Location is one of the most important factors that affect Airbnb’s income. According to data from our vacation rental company, houses with hot tubs and lake views get 30% more bookings than others; similarly, houses with access to public beaches and ski resorts get more bookings than others. Which directly affects the income from Airbnb. 

Competition: 

As Airbnb became popular, competition increased day by day. Other hosts and homeowners are also utilizing this platform to get more bookings. You must implement effective strategies to compete here by analyzing the market and setting your prices accordingly.  

There are other general factors, such as reviews from the guests, property conditions, occupancy rates, and dynamic pricing, which affect Airbnb’s income. 

Profitability Expectations from Airbnb in Lake Tahoe:

Second homes operating on Airbnb have a high profitability potential and good returns on investment because of the region’s year-round appeal and strong tourism market. Here are some insights based on the data from our vacation rental company about the profitability and expectations from your second home on Airbnb: 

Real-life examples of profitable Airbnb second homes 

One of the homes from our vacation rental company is making $45k a year. In June 2024, a peak season month, this property generated over $9k, and in July, $7k. In the shoulder season, in April 2024, this property generated over $4k.  

Expected income of second home on Airbnb in Lake Tahoe 

The expected income of a second home operating on Airbnb in Lake Tahoe depends upon factors like property type, amenities, location, and proximity to attractions like beaches and ski resorts. 

The house in the above example is a 3 bedroom, 2 bathroom, with a hot tub. It has all the amenities one can look for, like a gaming room, fireplace, BBQ, etc. It is located at Dollar Point and is close to the beach.  

Tax Considerations for Your Airbnb Investment

Here are some tax considerations that you will need to know if you are using your second home on Airbnb:

Transient Occupancy Tax (TOT):

Transient Occupancy Tax (TOT) in Lake Tahoe is collected by the county where your second home is located. There are 5 counties in Lake Tahoe, and each county has different tax rates and regulations. Airbnb collects the tax money and pays it on its own for some counties, and others, you will have to pay it to the county. 

  • Washoe County: Airbnb collects the tax money, which is 13%, and pays it on your behalf if your house is in Washoe County. 
  • Eldorado County: Airbnb collects the tax money, which is 14%, and pays it on your behalf as your house is in Eldorado County. 
  • Placer County: Airbnb does not collect tax money if your house is located in Placer County. You will have to pay it to the county by yourself. 
  • Truckee County: Truckee County has a tax percentage of 13.25%, and you must pay it to the county yourself. Airbnb does not collect it. 
  • Douglas County: Airbnb does not collect tax money for Douglas County either; you must pay it to the county by yourself. 

California Vs Nevada: Which is best in terms of property taxes? 

Property taxes are set at 1% of the home’s purchase price on California’s side of Lake Tahoe. Let’s say, if you bought a house for $400,000, you will have to pay $4,000 in taxes annually. On the other hand, in Nevada’s side of Lake Tahoe, property taxes are determined by county and are capped at 3.64% of the assessed value of your home. 

For more details, read our detailed blog on which side of Lake Tahoe you should choose. 

Last Words: 

Second homes in Lake Tahoe can be financed through Airbnb, but a strategic plan is required, and you should consider every point (income potential, rental rates, profitability expectations, etc.) to achieve this goal. You should also know that Lake Tahoe has peak and shoulder seasons, which can affect your income from Airbnb. And operating a property on Airbnb is not as easy as it seems.

If you are considering buying a second home in Lake Tahoe and finance is using Airbnb, we can help you achieve your goal. Our vacation rental company, MG Vacation Rentals, has been operating in Lake Tahoe for more than a decade, and with the data from there, we can guide you effectively. Feel free to contact us anytime.