(a) Digital real estate investments
Aside from being an eCFO I am also interested in personal investment decisions. Working with start-ups probably means that you are equity “rich”, cash poor and have plenty of private equity/capital exposure. In order to balance that exposure I personally invest in more “traditional” investment classes such as real estate, ETFs and large public company shares. Nevertheless, I do ask myself how my experience and current occupation can support my private investment decisions. Therefore this post outlines how digital tools can improve “old school” investments and help to build a balanced investment portfolio.
Imagine you are looking to buy a vacation home and want to find out what the optimal location would be. Is it by the sea, mountains, country, city? Obviously buying a property will always depend on several “micro” factors. It has to be well-maintained and should a good “micro” location e.g. close to attractions, far away from highways, etc.
Google search & maps:
Google maps and research about the actual location on Google search will provide you with a solid understanding of the region and the micro location of your vacation property. Only 5 years ago it would have been pretty expensive to get a satellite image of your property (unless you had contacts within the CIA) and to search through all local newspapers to see if there is a nuclear waste facility next to your property. Today this can be researched and evaluated within minutes.
Once you have made certain that your property has the correct “micro” factors it boils down to a pretty easy formula: will you be able to rent out the property at a price and for an occupancy rate that justifies the purchase price and related costs? What is our utilization rate and revenue?
In order to evaluate these individual metrics within your formula Google offers some fantastic FREE tools that will help you to determine the following factors:
Overall demand & supply: where does it come from? What are people looking for? How many properties at what utilization rate are already present in your market?
Seasonality: when are people searching for a property in your area? How high is the search volume compared to markets you are familiar with?
Advertising costs: how much is being spent on advertising in your local market? Will you be able to attract a substantial amount of visitors through Google/Facebook advertising?
Regional trends: what is happening in your region? What other search terms are relevant? How much are existing properties being rented out for?