STR Reality Check — Short-Term Rental Economics

1. The Full Cost Stack — Every Expense Most STR Owners Forget to Count

Platform Fees ($1,200-$2,000/yr) — Airbnb 3%, VRBO up to 5%, plus channel manager subscriptions around $20-$80/month.

Property Management ($8,000-$12,000/yr) — 20-30% of gross revenue. Most out-of-area owners rely on a manager.

Cleaning & Turnover ($5,000-$24,000/yr) — $100-$200+ per turnover, typically 50-120 turnovers/year depending on stay length.

Insurance ($3,000-$6,000+/yr) — Wildfire zone premiums are up 30-60% and STRs often need extra liability coverage.

Property Taxes ($4,000-$4,400/yr) — Roughly 1-1.1% of assessed value in Siskiyou County.

Utilities ($3,600-$7,200/yr) — Heat must stay on year-round to protect pipes. Typical utility range is $300-$600/month.

Snow Removal & Winter Maintenance ($1,500-$4,000/yr) — Plowing, roof raking, and freeze prevention are recurring mountain-market costs.

Maintenance & Repairs ($4,000-$8,000/yr) — Around 1-2% of property value annually. Mountain wear-and-tear can push this higher.

Furnishing & Supplies ($1,500-$3,000/yr) — Linens, towels, kitchenware, mattress replacement, and furniture refreshes.

Your Time (3-8 hrs/week) — Even with management: guest messaging, approvals, owner decisions, and issue coordination.

Annual cost summary: Low end (self-managed, lower turnover) $30,000-$40,000. Mid range (managed, moderate bookings) $45,000-$60,000. High end (full-service management, high turnover) $60,000-$80,000+.

2. The Return-on-Equity Worksheet — The Number That Actually Matters

Most STR owners track gross income, but the real metric is Return on Equity (ROE): net annual income divided by your accessible equity.

Line A: Gross Annual Rental Income. Line B: Total Annual Expenses. Line C: Net Annual Income (A minus B). Line D: Estimated Current Market Value. Line E: Remaining Mortgage Balance. Line F: Estimated Selling Costs (about 7.5% of D). Line G: Your Equity (D minus E minus F). Line H: ROE (C divided by G, times 100).

ROE above 5%: Strong. Your STR is outperforming most alternative investments. The management burden is the main question.

ROE 3-5%: Marginal. You're earning a return, but it's comparable to much simpler investments with far less work.

ROE 1-3%: Underperforming. Your equity is working harder for you in a savings account. The property is essentially a lifestyle asset, not an investment.

ROE 0% or negative: You're paying to own this property. After all costs, you're losing money annually while carrying management stress. Time to seriously evaluate your options.

For reference: A 1031 exchange into a long-term rental in a landlord-friendly market can yield 5-7% with virtually zero management. A NNN commercial lease property can yield 5-6% with literally no landlord responsibilities.

3. The Mount Shasta Seasonality Reality

Mount Shasta is not Tahoe. Understanding the local booking calendar is essential for realistic financial planning.

Winter Peak (Dec-Mar): 50-70% occupancy. Ski season at Mt. Shasta Ski Park. Holiday weeks are strong, midweek is often soft.

Spring Shoulder (Apr-May): 20-35% occupancy. Mud season. Ski area is closed and summer demand has not started.

Summer Peak (Jun-Sep): 60-80% occupancy. Strongest season for hiking, fishing, climbing, and family travel.

Fall Shoulder (Oct-Nov): 25-40% occupancy. Hunting season supports some demand; otherwise the market is typically quiet.

Realistic annual occupancy for a well-managed Mount Shasta STR is 45-60%. That means 40-55% of the year, your property sits empty while you pay every fixed cost.

What top-performing STR owners do differently: dynamic pricing (PriceLabs, Wheelhouse), shoulder-season marketing, minimum stay adjustments, professional photography and listing optimization, and strong local management.

4. The Insurance Situation — The Issue That's Blindsiding Owners

The insurance picture in Siskiyou County has changed quickly. Multiple major carriers have reduced appetite or exited parts of the county due to wildfire exposure. The carriers that remain have raised premiums significantly, and many owners are seeing 30-60%+ increases over the past three years.

A growing number of owners are receiving non-renewals with limited notice and being pushed to FAIR Plan combinations. FAIR Plan can protect the dwelling, but it does not automatically provide full personal property, liability, or loss-of-rental-income coverage unless layered correctly with companion policies.

STR owners face an additional layer of risk: many standard homeowners policies either exclude short-term rental activity or cap coverage in ways owners do not discover until a claim. In practice, hosts typically need an STR endorsement or separate commercial liability coverage, often adding another $500-$2,000+ annually.

What you should do: Review your current policy and confirm STR activity is explicitly covered. Start renewal shopping 90 days before expiration. Work with a local Siskiyou County insurance agent. If insurance doubled, update your financial model immediately.

5. Your Three Options — Hold, Reposition, or Exit

Option 1: Reposition — Keep the property and improve operations: move to long-term rental, upgrade for better nightly rates, replace management, or rebuild pricing strategy. Best for owners with a good asset in a good location but underperforming execution.

Option 2: Sell — List, sell, capture equity, and remove carrying costs plus management load. Best for owners with ROE below 3%, operational fatigue, or insurance/cost inflation breaking the investment thesis. Remote-work buyers from Bay Area and Sacramento are still active, and turnkey STRs with reviews and history can command a premium.

Option 3: 1031 Exchange — Sell and redeploy equity tax-deferred into replacement property aligned with your goals. Best for owners with substantial equity who want to stay in real estate while exiting this asset profile. Possible targets include closer-to-home long-term rentals, newer assets with better insurance profile, or NNN commercial at 5-6% yield with minimal management. Key timeline: 45 days to identify, 180 days to close. Qualified Intermediary required.