Watch Me Buy a Website Business and Make a Decent Second Income!
Hi, I’m Brett, and I’m always on the lookout for new ways to make money.
I’ve been building websites for a while. But it’s time consuming to build your own websites. So I wondered if I could change tactics and buy a website business instead of creating one from scratch myself.
As I’ve written in a previous article, I’ve built websites that have made around $150 a month. $150 is a decent monthly income, and a dozen such sites would probably make you much more money than your pension pot or cash investment would ever generate.
I own a buy to let rental apartment, and after expenses it generates around $450 of income a month. $450 is nice, but three small websites could earn me the same income as an apartment that I bought for $185,000 in 2006!
Actually, I’ll let you into a secret. Very few people know that websites can be such great income generating investments. But how do you buy them?
Options for Buying a Website Business
So what are the options for buying a website business? Below are the three main choices:
- Buy an existing website
- Commission a new website
- Build a website yourself
I have no time for the third option, so I’ll discount that one.
Buy an Existing Website
It is possible to buy an existing website business. Really buying a website is no different to buying any other type of business. All you need to do is:
- Find a website you want to buy.
- Do due diligence on it (i.e. find out how much it costs to run, how much time is involved, what you’re actually buying, and how much money the site makes).
- Make the owners an offer.
- If the site is changing hands for more than $1000 and you don’t trust the site’s owner then arrange some sort of escrow service that will hold onto the money until the site is transferred into your ownership.
- Take ownership of the site.
- Develop the site by redesigning it, building more content or finding better ways of monetising it.
You can buy websites at digital auction sites like Flippa. The trouble with Flippa is that finding the gems in amongst the dross is very hard work, even for a seasoned website builder such as myself.
And Flippa is very popular, so sites sold through it often reach premium prices. For a decent site you’ll often have to pay 20-40 times monthly earnings for it, which is a pretty high valuation.
You’re usually better off by-passing Flippa and buying sites you like directly from their existing owners. Find a site you like, and make them an offer. This requires doing your own research, but you can occasionally pick up a bargain.
It’s best to stick to sites that cover topics you know something about, and would enjoy owning a site about. And you’ll often pick up a good deal if you look for a site that has a lot of visitors, but is poorly monetised. Sites that are run as a hobby can be surprisingly lucrative if they have plenty of traffic.
Should I buy existing websites? I’d like to do this, but the sites I’m interested in would have price tags in the $10,000 – $20,000 region. One day I might consider this, but for now this sort of price is out of my budget.
Commission a New Website
So I’ve decided to commission a new website!
I found a guy on the Warrior Forum who will build me a 50 page website for $899. The site will come with images, web hosting and even some YouTube videos. The site will be ready to run out of the box, so to speak.
I’m not too sure what topic the website will cover, but the site’s developer assures me that it will be a topic that people are interested in and who will want to spend money through the site’s advertising partners.
Obviously there are no guarantee that I will generate a good return on my $899 investment. But I budget for any website I create or buy to make money for at least five years.
Based on the websites I’ve created myself, I believe a 50 page website should make $3000 over 5 years.
If I invested my $899 in an income generating mutual fund yielding 5% a year then I’d have $1092 after 5 years. Of course I’d also risk my capital for those five years unless I invested in cash or some other investment with capital protection.
By contrast, my website should make $3000 over five years. At the end of those five years, I could probably sell the site again, and retrieve my intial investment. If the site earnt money on a daily basis then it would probably sell for at least $899, and probably a lot more (older established websites tend to be more valuable).
So it seems a no brainer! What could possibly go wrong?
I’ll point out that I’m looking for a five year return of 333% on my initial investment. You will never get this kind of return without taking a risk. There are many risks here, but I’m willing to take them.
I’ll update this site once I actually get the site and it (hopefully) starts making me a return on my investment. Stay tuned!
Is buying websites a good way to make money? Or is it too crazy for words? Is my $899 gone forever? Leave your comments below!
Update – 2 months on: So what happened to my site I ordered? Well I checked the progress and after 30 days the guy had written just 5 pages! I got a refund, so this experiment ended in epic fail!