If you’re looking for alternative investment ideas, have you ever considered buying and reselling websites?
You probably know that growing an online business can be an excellent way to build wealth, but starting a business from scratch isn’t the only option.
Website flippers buy online businesses with the goal of selling them for a profit. While this side hustle definitely isn’t for everyone, it offers huge potential for those who are successful.
What Is Website Flipping?
Website flipping involves buying websites or blogs, improving them, and then selling them for a profit. The concept is very similar to house flipping. The goal is to find a property (in this case, a digital property) that can be purchased and improved. After the value of the site has increased, it can be sold for a profit.
Some website flippers aim for a quick turnaround, and they typically only hold the sites for a few months while they make improvements. Others may hold and operate the sites for several years before selling. In this case, the sites can be a good source of revenue while they’re owned, in addition to the profit made from selling.
Of course, it’s important to mention that website flipping involves risk. Although the goal is to improve the site and make money, it doesn’t always work out that way. It’s possible the site will decline and lose money. You should consider your risk tolerance and only invest money you can afford to lose.
Why Flip Websites?
Building a successful website takes a lot of time. Most sites make nothing or very little for the first year. You may need to put in a lot of work before you earn anything. Buying an established site allows you to skip this phase altogether.
It’s possible to earn an excellent return on investment (ROI) if you’re good at growing and monetizing websites. You may be able to find sites that are already getting traffic and making money, but they could be improved with some easy changes or additions.
Instead of spending a year building a site from scratch that may or may not ever be successful, you can use that time to improve a site that’s already making some money.
Determining a Website’s Value
Before you buy a site, it’s important to understand how websites and online businesses are typically valued. Although there are exceptions, valuations are typically based on the site’s average monthly or yearly profit.
Valuations for established sites are usually somewhere between 36 -48 times the average monthly profit, although they can be higher or lower. Businesses that generate significant profit often sell for higher multiples. For example, a site that makes $50,000 profit per month may be worth $3,000,000, or 60x the average monthly profit.
Each buyer has their own method for determining how much a site is worth to them, so it’s very subjective. However, the range of 36-48x average monthly profit is a good starting point.
That’s a quick look at the topic, but you can read this website valuation guide for more details.
Finding and Buying Websites
The first step is to find a site you want to buy. There are a number of website marketplaces where you can browse and see sites that are for sale. If you’re just getting started, choosing a relatively small investment is a good idea.
Although some marketplaces and brokers ignore sites with lower values, Flippa and Motion Invest are among the best options for low-priced established websites. You can also find sites privately by reaching out to the owner to see if they’d want to sell. However, this takes a lot of time, and you don’t know how much a site is making before reaching out.
It’s good to know the type of website you want to buy. Content-based sites (blogs and niche websites) are popular because they’re simple. But other options include e-commerce, Amazon FBA businesses, SaaS, membership sites, etc.
You’ll need to do your own due diligence and verify the income and expenses listed by the sellers. Look for red flags or potential concerns before buying the site.
Of course, you should look for a site that presents opportunities for easy improvements. (More on these possibilities in the next section.)
Increasing the Value of Your Website
After you’ve purchased the site, it’s time to work on the improvements. The specific tasks will depend on the site, the content it includes, and how it’s monetized.
Here’s a list of common tasks or changes that may help to improve a site’s traffic or revenue:
- Change the theme or template to improve the site’s design.
- Put ads on the site or switch to a different ad network.
- Add promotions for a new affiliate program.
- Add more prominent promotions and calls to action.
- Add comparison tables.
- Build an email list.
- Make changes to improve the site’s search engine optimization.
Website flipping is ideal for someone who has previous experience running a website or blog. If you can look at a site and determine how it could be improved, you may thrive in this business model.
Since the average monthly profit is the biggest factor in determining a site’s value, you can increase the value by growing profits.
If the site was making an average of $1,000 per month, it may have been worth about $36,000 when you bought it. If you increase the average over the next six months to $1,500, you may have increased the value to about $54,000.
One of the biggest decisions you’ll need to make is when to sell. If you’ve increased the profit, you may be able to sell it for more than you paid. However, you might be able to increase it even more by continuing to work on the site for a while longer.
There’s no right or wrong approach when it comes to short holds vs. longer holds. You’ll need to decide if you’d rather sell for a smaller profit or continue to work on the site with the hope of a bigger profit (and the chance of seeing the value drop instead).
How to Sell Websites
When you’re ready to sell the site, there are several ways to do it. Of course, you can sell it independently if you’re able to find a buyer on your own. Facebook Groups for buying and selling sites also present an option for selling without marketplace or brokerage fees. Some of the most popular Facebook Groups for website flippers include:
If the site is making at least $2,000 per month, you can sell it through Empire Flippers (not all sites are approved for their marketplace). Motion Invest is a good option for content sites. Flippa is another option and can be used for all types of sites and at any list price.
Final Thoughts on Website Flipping
If you have experience with websites and blogs, or if you’re interested in online businesses, flipping websites could be an excellent way to find high ROI investments. The risks are high, but so are the potential rewards.