Airbnb market analysis and investment insights
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South Lake Tahoe, CA — Market Intelligence Report
Researched by Chalet's Senior STR Analysts · Verified with local South Lake Tahoe market partners
South Lake Tahoe is the most supply-constrained major STR market in the western United States, and that constraint is the entire investment thesis. The City of South Lake Tahoe and El Dorado County enforce hard permit caps that have kept full-time Airbnb listings at just 481 — an extraordinarily thin pool for one of America's most famous year-round mountain destinations. The result: Chalet data shows those 481 properties generating $74,663 in average annual revenue at a $430 ADR and an 11.75% gross yield against a $635,406 median home value — ranked #62 nationally. That $74,663 average is the highest gross revenue figure of any non-luxury market in this series. The market operates on dual peaks: summer lake access (June–August averaging $9,174/month at 58% occupancy) and ski winter (December–February at $5,680/month with $630 peak ADR in December) — two structurally independent revenue seasons that only the deepest shoulder troughs of spring and fall interrupt. Full permit requirements and compliance details are in the South Lake Tahoe STR regulations guide.
The 3-bedroom mountain home is the market's defining investment vehicle, generating $78,390 annually at $518 ADR — the most popular property type in the full-time listing pool. Heavenly Village and the lakefront corridor in South Lake Tahoe proper hold the highest ADR properties ($700–$1,200+/night for 4–5BR ski chalets with hot tubs and mountain views), though permit competition in these zones is most intense. The Myers and Pioneer Trail neighborhoods — inland but close to Heavenly Mountain Resort — offer the best yield-adjusted entry at $450,000–$650,000 for permitted 3BR properties with $75,000+ revenue potential. A strategically important alternative sits across the Nevada state line: Stateline and nearby Nevada-side properties capture identical Lake Tahoe demand while entirely avoiding California's 13.3% top income tax rate, a material after-tax return advantage for high-income investors that can add 3–5 percentage points to real cash-on-cash returns. A Chalet agent who knows both the permit landscape and the Nevada-side market structure is essential for serious acquisition due diligence.
The investment case for a permitted Tahoe property is unusually clean at current home prices. A representative $635,000 3BR with a secured STR permit generates $78,390 in gross revenue; after management fees (22%), property tax (0.70% effective), insurance, and mountain maintenance, the net operating income approaches $48,000 — a 7.6% cap rate. At 70% LTV and 7.5% rates, pre-tax cash-on-cash approaches 7–8% on a $190,000 down payment, one of the strongest leveraged return profiles in any California market. The supply cap is the durable moat: unlike markets where new supply can erode yields when too many investors enter, Tahoe's permit ceiling means existing operators face no supply expansion risk. The Chalet ROI calculator models specific Tahoe scenarios at multiple bedroom counts and leverage assumptions.
The risks cluster around California-specific structural headwinds. California's income tax at up to 13.3% reduces after-tax returns by 15–20% relative to equivalent-yield Texas or Florida properties — a real cost that must be modeled explicitly, not footnoted. Securing a new STR permit through the city lottery is genuinely uncertain: permits are issued when existing ones lapse, and competition for available slots is intense. Spring and fall represent genuine trough seasons at 36% occupancy; cash reserves matter. Mountain operating costs — snow removal, HVAC servicing, roof maintenance — add $3,000–$5,000 annually versus comparable flatland properties. No California statewide preemption law protects STR investors if the city or county decides to tighten the permit regime further, which remains a policy risk under Sacramento's ongoing STR legislative debate.
South Lake Tahoe is the western US's best argument for supply-capped STR investing — a dual-season mountain lake destination where a hard permit limit holds 481 operators at $74,663 average annual revenue, and where the investors who secure permits through acquisition, lottery, or Nevada-side positioning before the next regulatory tightening hold an asset whose scarcity becomes more valuable with every rejected permit application.
Get matched with top South Lake Tahoe, CA lenders who specialize in short-term rental financing — they understand STR underwriting and offer competitive rates for investment properties.
