Every week someone sends me a Zillow link with the message "does this pencil?" Here's the actual process I use to answer — the same one I use before buying for my own portfolio. No agent hand-waving, just the spreadsheet.
A disclosure before the math: I operate 40+ Tahoe STRs through MG Vacation Rentals, so the assumptions below come from my own trailing-12-month data (PriceLabs, June 2025–May 2026), not industry averages. Your property will differ. That's the point of underwriting.
Step 1: Kill the deal on permits first
Before revenue, before photos: can this parcel legally operate? Tahoe has 7 jurisdictions and in nearly all of them the permit dies at closing — you're applying fresh. Truckee is waitlisted. Douglas County is 547/600. El Dorado has a 500-ft buffer rule that can disqualify a parcel because of a neighbor's permit. And HOA covenants override everything — plenty of Incline Village condo buildings prohibit STRs even though Washoe County, NV would issue a permit.
Ten minutes of permit diligence kills about a third of the deals people send me. Good. Cheaper to kill it now. Full rules by county →
Step 2: Build revenue from comps, not hope
I pull the property's true comp set — same bedroom count, same micro-area, similar quality — and look at three numbers: occupancy, ADR, and RevPAR (rate × occupancy, the only one that can't lie to you).
What I will not do is annualize July. Portfolio-wide last year, July ran 77% occupancy at a $507 ADR; October ran 35% at $276 — full market-by-market revenue data here →. A Tahoe STR earns its year in roughly 14 peak weeks, and an honest pro-forma weights the other 38 accordingly. I also haircut the comp data 5-10% for year one — new listings rank lower on the platforms until reviews accumulate.
Step 3: The expense lines agents forget
Here's a real underwrite for the kind of deal I see most often: a 3-bedroom in Incline Village at $1.5M, the strongest segment in my portfolio last year (65% occupancy, $292 RevPAR).
| Line | Annual | Basis |
|---|---|---|
| Gross rental revenue | $107,000 | RevPAR $292 × 365 (my portfolio actuals) |
| Management (20%) | -$21,400 | Full-service; self-manage and this becomes your second job |
| Utilities + internet + snow removal | -$9,500 | Mountain reality: plowing isn't optional |
| Insurance (STR policy) | -$6,500 | Standard homeowner policies exclude STR use |
| Maintenance + hot tub service | -$8,000 | Guests are hard on houses |
| Supplies, linens, restock | -$3,000 | |
| IVGID assessment | -$2,000 | Incline-specific; varies by property type |
| Licenses, software, misc | -$1,600 | Washoe permit $500-1K/yr + tools |
| Net operating income | ~$55,000 | ~3.7% unlevered yield |
Notes: Washoe County's 13% TLT is collected from guests on top of the nightly rate, so it doesn't appear as an owner expense line — but it affects your achievable pricing. Property tax (~0.6% in Washoe County, NV ≈ $9K here) and any debt service come out of that $55K. At 25% down and today's jumbo rates, this property is roughly cash-flow-neutral to slightly negative after debt.
Step 4: Judge it as a total return, not a cash machine
So why would anyone buy it? Because the honest Tahoe STR case was never "retire on cash flow." It's four stacked returns: modest net income, appreciation in a supply-constrained market (TRPA makes new building genuinely hard), personal use you'd otherwise pay for, and — on the Nevada side — zero state income tax on the rental income and no state capital gains when you sell. For a California-income buyer, that last line alone can be worth more than the cash flow. CA vs NV tax breakdown →
When a client's goals are pure yield, I say so and we look at different markets or different price points — my own data says the 3BR band beats the 5BR trophy on yield, which is why I'd rather put a $2M+ budget into two smaller doors. And when a deal doesn't pencil at all, the underwrite says it before escrow does. That's the entire value of doing this before you offer instead of after.
The checklist I run on every deal
Permit eligibility verified per parcel (county + HOA + buffer rules). Comp-set occupancy, ADR, RevPAR pulled, then haircut for year one. Seasonality modeled monthly, not annually. All eight expense lines above. TOT/TLT rate confirmed for the county. Property tax at the new assessed value, not the seller's. Debt service at a real quote, not a hope. Exit: who buys this from you, and does the permit survive the sale (it almost never does)?
Send me the Zillow link — (530) 317-0373 — and I'll run this on the actual address. If it doesn't pencil, you'll hear that too. Work with an operator agent →
FAQs
What is a good cap rate for a Lake Tahoe STR?
Unlevered yields on quality Tahoe STRs typically land in the 3-5% range at 2026 prices, based on my operated portfolio. Buyers are compensated through appreciation, personal use, and Nevada-side tax treatment rather than cash flow alone — anyone quoting 8%+ is usually skipping expense lines.
What expenses do Lake Tahoe Airbnb owners forget?
The most-missed lines I see: snow removal, STR-specific insurance, hot tub service, IVGID assessments in Incline Village, NV, permit renewal fees, and reassessed property taxes at the new purchase price. Together they routinely turn a "10% return" pitch into the real 3-5%.
Do I have to collect TOT on a Tahoe rental?
Yes — every jurisdiction requires Transient Occupancy Tax (10-14%, plus Washoe County's 13% TLT on the Nevada side). In South Lake Tahoe, CA, hosts must self-collect and remit; Airbnb and Vrbo do not handle it for you there.
Assumptions reflect MG Vacation Rentals portfolio actuals (PriceLabs, June 2025–May 2026) and standard Washoe County, NV cost structures; flagged where estimated. Not tax, legal, or investment advice — confirm specifics with your CPA and the county. Murat Gocmen, Broker · CA DRE #02221968 · NV B.1003327.LLC.