Monat: November 2012

Google Insights for Search:

Address: http://www.google.com/insights/search/?hl=de

Preparation: Estimate a number of key words for your vacation rental

There are a couple of important variables you can see here:

1. Seasonality – if the search volume is impacted by seasonality you will see it going up and down as shown in the screenshot above. So your property will be more likely to be fully utilized when search volume is up.
2. Regions – with the second screen shot you can see where most of the search volume comes from. This is important for advertising purposes and to understand if demand is driven regionally or through other factors.
3. You can add other variables and compare it to your search volume. You can see that ice cream has seasonality (screen shot 3)

Google Keywordtool

http://adwords.google.de/

In order to check which specific key words people are searching for you can use Google’s keyword tool.

Enter an initial keyword such as “Pocono Mountains” and add a “#” symbol. Google will not only provide the specific search term, but show a range of suggestions based on what people have been searching for. Here you will see the monthly search volume and also see if competition for advertising based on these search terms is either low, medium or high. Play around with this tool for a little bit to get a feeling for numbers – for example compare the screen shots looking for “Pocono Mountains” with a search for “Marthas Vineyard”.

Local digital competition analysis

Access a range of online booking agencies (Wimdu, AirBnB, etc.) and find out how many properties are listed in the region. Note down certain differentiating aspects (number of bedrooms, proximity to regional attraction points, coast/lake etc.) and the average weekly/monthly prices. This should provide you with a good understanding of regional pricing.

Depending on the time you want to spend you can also check their calendars and available opening for the next two months to see if there is a high demand for rental properties.

Local booking/vacation agencies

Call local vacation rental agencies and tell them that you have a property you would like them to manage. Find out how many bookings they are willing to guarantee on average and what they charge as a management fee. In addition, ask them about regional aspects, seasonality and their experience of managing local rental properties. Use these factors to improve your online research and analysis.

Investment decisions can now be supplemented with free and easily accessible data that only a couple of years ago was only available to sophisticated large investors. Now you can use this data to make better investment decisions!

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?