Many websites bring in consistent monthly revenue. This makes them very attractive investments as many sites make enough revenue to take the place of a full-time job and are partially or near completely passive.
Investing in websites isn’t an easy process. Finding the right websites takes knowledge, experience, and good systems to succeed.
Let’s discuss the ins and outs of this business model!
What is Website Investing?
Website investing is the practice of buying websites with the intent of making a profit. This can be from passive income, improving the monetization on sites for better cash flow, or even flipping sites.
There are many different forms this can take, and many different types of online businesses that can make a website profitable.
Is It Worth Investing In a Website?
While it takes a lot of effort, a lot of monetary investment, or both, investing in websites can be a very profitable endeavor. There are opportunities for making not only decent money, but what many people would consider job-replacement levels of income.
I have published dozens of website sale case studies that show the process used on multiple sites. These clearly show that it can be worth the time and effort to invest in a website, with many five-figure pay-outs and even a case study of a “failure” of a site that sold for $6,000 more than it was purchased for.
Here are numbers behind a few of my recent website flips:
- Wellness website: acquired for $5,650 in July 2020 and sold in December 2020 for $30,100. The site was earning $300/mo and when sold it was earning $936/mo.
- Dating website: acquired for $32,000 in early 2019 earning about $1,000/mo. The site currently earns $9,000/mo. The site is valued at $315,000 to $350,000.
- Outdoor website: acquired for $23,000 in April 2020. The site was earning $300/mo. We scaled the site to earn $3,000 to $6,000 per month depending on the time of the year. The site valued at $140,000 to $160,000.
Even “fast” website flips take some time and quite a bit of work. Website investors looking for passive income will still want to look at improving traffic and optimizing monetization to bring in more monthly income.
Is it worth investing in websites? In the right ones, absolutely! But it takes work to get the most out of each deal.
Buying vs Building a Website From Scratch
The question often comes up of whether it’s better to build a website from scratch or to buy a website. I dived deep into this topic in this article as well.
There are pros and cons to each method. It’s not unusual for experienced website builders to do both at the same time, especially when building and scaling a portfolio of sites.
Pros and Cons of Buying
Buying sites that are built for you basically gives an investor their time in exchange for money. Paying for professionals to build a profitable site, and build it well, tends to be fairly expensive but it allows the investor to be hands-off.
For investors who don’t have a lot of time, or don’t have any experience at all, this can be a great way to learn the basics and get a viable site without having to pour hundreds of hours into the process.
Buying a DFY package might be out of the budget of many beginners. If that’s the case, then working to build profitable websites is the right play.
Once the money isn’t as tight, this is an option that is worth visiting for many investors.
- Beginners can watch professionals build a site step-by-step to learn the basics
- Very hands-off, leading to big-time savings
- Very expensive compared to building a site on your own
- Little to no control over site setup, keyword selection, and quality of content
- While they can learn the basics by watching, nothing beats the “hands-on” education of building a site from scratch yourself
Pros and Cons of Building
Why build a website from scratch if it’s possible to hire someone to do it for you? There are several advantages to going the building from scratch route.
One is learning. While it’s possible to learn the basics of the process from watching how the DFY professionals do things, there’s no better way to learn all the nitty-gritty details than to do them yourself.
This knowledge is important for not only succeeding on a first site, but those lessons make it possible to repeat the process over and over again.
Another major positive is the budget. While building up a profitable site requires a lot of time and effort, it will be cheaper than DFY. This even includes expenses like learning to hire freelancers and creating a process for them to create usable content.
Whether this option is the right one for you comes back to that classic question of money vs. time.
- Complete control over site structure, on-page SEO, and keyword choices
- Can replace expenses with time
- Much cheaper than going the DFY route
- Prepare to invest hundreds of hours of work into building a site, especially if it’s from scratch
- Must have processes in place to find writers, editors, programmers, etc. if you want to expand at any decent rate
- Can take a lot more time to get rolling as a true beginner since you need to learn the process first-hand
Why You Should Invest in Websites
Websites are an amazing investment. They allow a person to build their own safety net by creating a cash flow that keeps coming in month after month. They can keep that site as a source of passive income, their own financial safety net, or sell it for a big pay-off.
Build multiple sites, and get the best of both worlds. Multiple large payments along with a steady cash flow that is coming in every month. The potential returns from websites can be incredible. Especially once you fully understand what you’re doing.
There are two main strategies to investing in websites, which are:
- Buying and holding monetized websites to bring in passive monthly income
- Buying a website, growing its traffic and revenues, then selling for a big one-time payout
There’s no right or wrong answer to which is better. Both are valid strategies, and I’ll take a deeper look at both in the next sections.
Buying Websites For Passive Income (Cashflow)
When buying websites for passive income the idea is to buy websites that make money, improve monetization, and just hold them. These can be active businesses but often they are websites with affiliate ads and display ads.
For example, for someone who figures out their expenses for a good life as $3,000 a month, buying two sites making $500 a month and one making $2,000 a month gets them to that number.
Even when buying websites already generating revenue it’s important to look for easy wins to improve the income numbers.
Easy wins to look for include:
- Add or improve display ads
- Optimize for affiliate offers
- Add a lot of content targeting low competition keywords
- Improve site speed and on-site SEO for more traffic (and more revenue as a result)
Someone who learns how to make a site that earns $2,000 a month and can repeat the process repeatedly to build up a very impressive passive income.
If someone talks about buying a site to add to their portfolio, this is often the tactic being referred to.
Buying and Selling a Website (Flipping)
The other method is buying an existing website, improving the traffic & revenue numbers, and then selling (flipping) it for a higher price.
Since the average valuation of a niche website is 30x to 40x monthly revenues, even a moderate improvement in monthly revenue can make a big difference in what a site is worth.
I love this method. Buy a site, improve it with easy wins, drive up the revenue numbers, and then sell for a much larger price than what I paid for it.
You still collect the cash flow while you own the site, but with this method it ends with a big one-time payout.
Due Diligence When Buying a Website
Due diligence is crucial before purchasing any website. There are many good deals out there, but there are also many overpriced sites or outright scams. Doing the work ahead of time is critical to avoid scams and make sure every deal is a profitable one.
If in doubt, pass and move on to the next deal. Never ignore a red flag.
Short Due Diligence Checklist:
- What is the age of the site?
- What are the traffic numbers and trends?
- What are the revenue numbers? (Make sure to confirm!)
- Check on the backlink profile. Look for spam, PBN, or toxic links.
- How good or bad a job did the current owner do with monetization?
You can check out my full due diligence guide to buying a website by following that link.
1. Domain History
The domain history is important. Is the site new or old? Did there used to be another site under that name? Older domain names with a history are often a plus.
Backlinks are a crucial part of SEO. Good backlinks can make a site more attractive while a bad backlink profile should scare you off from investing in a site.
Don’t ignore any red flags in this step. If you see problems, skip the site and look for another deal.
How solid is the traffic? Is it steady, growing, or declining? What are both the short-term and long-term trends for traffic in the niche?
4. Revenue & Sources
What is the site revenue? Are they using display ads? What type of ads? Are affiliate links interspersed through the content or not?
Looking at the revenue numbers and the monetization can tell a lot about the potential for quick improvement.
What To Look For When Buying a Website?
There are several things to look at before pulling the trigger on a website acquisition.
1. Costs & Profits
Not only should you look at the total revenue per month, but you also want to look at costs. This tells what the total profit is and gives a better sense of what the website is really worth to you.
Some sites that look great at first glance might not look nearly as good if most of the revenues are eaten up by costs.
The Return On Investment (ROI) that a site offers makes a difference. If you’re looking at a flip but a site only promises a small profit after months of work, that ROI isn’t worth it.
If a site looks like some easy wins could quickly double or triple the site’s profits, that ROI makes it look much better.
What’s the risk? Is the niche YMYL? Is there a lot of competition in the niche? How solid is the website?
Analyzing risk is really important to figuring out whether a deal is worth it or not. Don’t force yourself past your risk tolerance.
4. Technical Requirements
Some online sites or businesses will require more technical expertise than others. Understanding the technical needs that a site will have needs to be a part of any due diligence process.
The Website Investing Process
The website investing process can be broken down into seven steps. The first part is to understand the process of website flipping so you know the full extent of the due diligence and work that needs to be done.
When you have a handle on that, it’s all about finding that deal. It can happen on marketplaces or it can be done via private deals. Keep looking until you find a site that passes your due diligence and acquire it.
Perform the easy wins to increase traffic and revenue. When the numbers jump you want to hold it 6-12 months to let the new improved valuation take hold. Enjoy the cash flow during that time and then sell at the end.
When you’re finished, repeat the process!
Website Investing Process Short List
- Understand the process first
- Source a website to buy
- Acquire the website
- Perform easy wins
- Hold for 6 to 12 months
- Flip the site
Is There a Website Flipping Course to Get Started?
I’ve put together a website flipping course that pulls from my over ten years of experience flipping over 180+ websites.
This course is well-organized, clearly lays out each step of the website flip life cycle, and includes video sections that dive in-depth into each part of the process.
I’m confident this course answers every question you could have about website flipping and can teach anyone how to successfully buy, improve, and flip sites for a profit.
FAQs about Website Investing
Website investing can be confusing for beginners or even moderately experienced webmasters. Here are the most common questions asked about website investing.
How much should you invest in a website?
This depends on your budget and what you’re willing to spend. For a good DFY site expect to spend many thousands to really get it going. If you are building it yourself expect a few thousand from a team to as low as several hundred for hammering it out solo.
Can I run a website for free?
No. There are expenses to running a website however a really budget-strapped website owner can get away with paying for hosting and a domain name, and that’s it. Everything else can be worked on with time and hard work.
How much does a website cost per year?
The average domain name costs $10-20 a year depending on which registrar it is purchased from. Shared hosting plans start at $4.50 a month to $20 a month according to Website Builder Expert.
Servers can cost several hundred dollars per month, but once you have enough traffic to make that necessary the cost shouldn’t be a concern.
What is the average monthly cost for a website?
Bootstrappers can build a website for roughly $10-20 a month while $100 a month could be considered moderate if some premium themes/plugins and/or high-level hosting is involved.
Is buying a website a good investment?
As with all investments, some websites are good investments while others are bad. On the whole choosing to invest in revenue-generating sites is a great investment. The upside is considerable.
Investing in websites can be a powerful way to create income and cash flow. A person can create long-term passive cash flow, flip a site for a big payout, or do both.
Getting started requires the same actionable steps:
- Weigh the pros and cons of building versus buying a website
- Settle on a long-term plan whether it’s holding sites for passive income or flipping sites for a profit
- Practice looking for a good website deal until you get comfortable knowing what to look for
- Find your first site to invest
- Consider buying the website flipping course for in-depth information and guidance from a seasoned pro
- Look for easy wins to improve site performance, traffic, and revenue
- Be patient – even on an optimal timeline you are looking at 6 to 12 months before flipping to get the most out of it
Follow the advice in this article and you’ll find that your foray into website investing might very well be one of the best, and most profitable, decisions you make.