The True Costs of Owning Real Estate in South Lake Tahoe

With all of the first time home buyers and investors diving into the South Lake Tahoe real estate market, I figured that I would write a blog post about all of the costs that should be taken into consideration before purchasing a home. In this blog post I will go over the costs associated with purchasing and owning a home in South Lake Tahoe. With the most active recent price range being under $300,000, I based my costs on a single family home with a sales price of $300,000.

When owning a home in South Lake Tahoe, you need to be aware that there are more expenses than just your mortgage payment and taxes. Other expenses include the South Lake Tahoe Public Utility District (water and sewer), the South Tahoe Refuse (garbage collection), Taxes, Insurance, Maintenance,  possible snow removal and landscaping.

The South Lake Tahoe Public Utility District charges $231.01 per quarter for water and sewer fees in the City of South Lake Tahoe. Water use is not metered at this time and is charged as a flat rate.

The South Tahoe Refuse charges 65.28 a quarter for trash pick-up. It is mandatory in South Lake Tahoe to have trash pick-up even for vacation homes and vacant homes.

The real estate taxes are based on the purchase price and are about 1.1%

Hazard insurance is a must, and is a requirement if there is going to be a loan on the home.

It is a good idea to have a snow removal company clear your driveway in the winter for second homes. The snow can really pile up and get as hard as concrete if it is not cleared often. Second homeowners will also want to consider hiring a landscaper to keep their yard looking nice during the summer.

Homes in South Lake Tahoe are exposed to a harsh environment and will need regular maintenance and up-keep. Wood houses will need to be stained every 3 to 5 years and paint grade houses should be painted every 5 to 10 years. Furnaces and water heaters should be serviced annually and chimneys should be cleaned to prevent chimney fires. All other normal maintenance costs should also be taken into consideration.

Here is a breakdown of the costs associated with purchasing a $300,000 home in South Lake Tahoe. The title and escrow fees were provided by Placer Title. I used a conventional 30 year 80% loan of $240,000 at 5% interest amortized over a 30 year period.

Buyers Estimated Net Sheet

123 Main Street

                                                                                  Charges                      Credits

Sales price                                                                  $300,000

New Loan                                                                                                       $240,000

CLTA Standard Title Policy, 1/2 Buyer                   $486.50

ALTA Loan Extended Coverage Policy                   $441.50

Recording Fee                                                              $75.

Escrow Fee, 1/2 Buyer                                                $485.

Outside Notary Fee if Applicable                               $125

Hazard Insurance                                                         $800

Termite Report                                                              $200

Home Inspection                                                           $300

______________________________________________________________________________________

******SubTotals******

Due From Buyer                                                     $302,912.50                $240,000

                                                                                                                         $62,912.50

Totals                                                                     $302,912.50                  $302,912.50

Including the hazard insurance, there would be $3,112.50 in closing costs to purchase the home. There would also be prorations for the taxes, refuse, and water and sewer on the closing statement.

The monthly costs associated with owning the house in South Lake Tahoe are as follows:

Mortgage payment on $240,000 at 5%                    $1288.37

Taxes based on a $300,000 sales price                    $275.

Hazard Insurance                                                    $66.67 ($800/12 months)

Water and Sewer                                                      $77. ($231.01/ 3 months)

Refuse                                                                     $21.76 ($65.28/ 3 months)

_____________________________________________________________________________________

Total Monthly Cost                                               $1,728.80

I did not include any snow removal or landscaping in the monthly cost because they are optional. I also did not include any maintenance costs because they are variable, but should also be considered. One last consideration would be any costs associated with the loan such as loan origination fees, appraisals, ext..

It is a great time to purchase real estate in South Lake Tahoe, but first you should make sure that it is in your budget. Buyers who are planning on purchasing a home and renting it out will most likely not be able to cover all of the costs associated with owning the house. There will probably need to be some money invested by the owner in order to cover all of the holding costs. Purchasing a home in South Lake Tahoe may still be a great investment if you purchase a home with the current low values and low interest rates. Once the market rebounds, owning a house in South Lake Tahoe could be an incredible investment!

Please call Brent and Jill Johnson for more information regarding South Lake Tahoe real estate today!