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Alternative Investment Opportunity – Buying and Selling Websites

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Editor’s Note: Many investors have become frustrated with the small returns offered by traditional investments, especially in light of recent events in Wall Street and the Real Estate Market. This article looks at an a non-traditional investment opportunity that could provide positive results for you. As with all investments, do your research and make sure you understand the potential risks and rewards.

As interest rates, real estate investments, and volatile stock prices continue to disappoint investors, many are turning to the World Wide Web for higher returns, lower risk, and better growth potential for their money.

Investors Are Frustrated With Low ROIs

If you’ve checked your bank statements from the last few years, then you’ve noticed that the interest on your savings is near zero. Even traditional CD rates, which historically have higher-than-average returns, are sputtering around a measly one percent. At this rate, inflation is higher than interest, which means that your money loses value the longer it sits in the bank.

Real estate investments and the stock market aren’t proving much better. Market volatility is scaring investors out of traditional investments, especially since many economists predict a double dip recession to continue to drive down real estate prices.

As a result, investors are looking to alternative places to put their money, and many are finding a haven in one of the financial world’s best kept secrets – buying and selling websites.

Why Websites Are An Attractive Alternative

Since websites are essentially tiny businesses, they can be bought and sold just like any other asset. A key difference, however, is that websites pay “dividends” because they often earn solid incomes themselves.

Because of the instability of traditional investment vehicles, investors are discovering that they can buy incomes without having to assume the risk and headache of brick and mortar businesses. Instead, they can buy websites, which typically have similar incomes to traditional businesses, but without having to hire staff, keep inventory, or change locations. In fact, they often serve as ideal home based businesses that can be purchased for much less money than a franchise, and they require less start up capital than a new company.

Websites typically sell for between ten and twenty times the average monthly profit, which equates to 120% to 240% ROI per year, assuming that the income from the websites does not change. In more specific terms, this means that a website making $1,000 a month (be it from advertising, selling products, or from membership dues) can be purchased for as little as $10,000. These returns are absolutely unheard of in stocks, real estate, and most other businesses. With websites, these returns on investment are very common.

How To Profit From Buying and Selling Websites

The secret to making money by buying and selling websites is in identifying and negotiating good deals. Just like in real estate, money is made when you buy, not when you sell. If a good price is negotiated on a money making website, it can either be held for long term income, or it can be flipped for fast cash. The ROIs are higher than traditional real estate, but the needed start-up capital is significantly less.

The market is still in the infant stages for websites, so profitable, proven assets can still be scooped up for pennies on the dollar. Website auction marketplaces like Flippa.com continue to pop up, as well. As investors wake up to the fact that websites are legitimate businesses that provide better ROIs than traditional investments, the market should only continue to improve over the next decade.

Is buying websites for you?

Buying websites can be a great opportunity if you know where to look and how to value a site. But it isn’t for everyone. At the minimum, you need to understand the fundamentals of how websites get traffic and make money.  Tech skills are helpful, but not always necessary because you can easily find contractors who can help transfer the domain and upload the site’s files to your webhost (check out oDesk or eLance.com for freelance workers).  If you are looking for an alternative investment opportunity, then look into buying and selling websites.

About the Author: Ryan Moran writes about buying and selling websites. To learn more about how buying and selling websites can boost your investment income and trump real estate and stock market returns, visit eTycoon.net.


Published or updated February 28, 2011.
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{ 6 comments… read them below or add one }

1 Briana @ GBR

I bought a few domains for myself, but never thought about becoming a Website Broker. I discussed it with a few of my coworkers, and it could definitely be a viable side business / passive income. But, then again, we were talking about links, not websites. I feel a new business venture coming on!

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2 EasyFinanceAdvice

A good follow-up post would go into detail of how to value a website and make sure that you are investing wisely.

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3 Andy Hough

I’ve bought two websites. One is a good money-maker for me but the other one was a rip-off that. The page rank and traffic had been faked making the site basically worthless. You have to be careful when buying websites, if I had done a little more research I would have realized the site wasn’t as advertised. I’m still looking for more websites to buy but I’m very careful of who I deal with now.

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4 Harry

I bought 15 websites all from Flippa, I dont know very much about which is a good site or a bad site, I am still learning. What I have found is some of the sellers know when you dont know anything about wesites and how it all works, I was sad to find that sellers dont move there ads and replace them with your codes, so basicall your site is all set up todo all the work for someone else whom you alreday paid.

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5 Ryan

Harry, it isn’t up to the selling party to change any of the code on the site unless it was agreed upon before you purchased the property. Buying websites and running them as a business should be done by people who know what they are doing and have a clear business plan in place. Otherwise you aren’t investing in a business, you are ambling, and almost certain to lose your money.

My recommendation is to stop buying new sites and choose to focus on only one of the websites you purchased – preferably the one with the topic you are most excited about. Focus on learning how the site works (see how to start a blog for more info), learn how to generate more traffic, and learn how to place your own ads and make more money with them.

Put your other sites on ice until you can master running one website. (focus only on keeping them up to date with the latest software, as you don’t want them to get hacked; otherwise let them be for awhile). Once you master one site, then pick your next favorite topic out of your remaining sites, and repeat the process. Choosing the topic you are most passionate about will help you be motivated to create better content and reduce the likelihood of burnout.

You might also consider selling some of the sites you aren’t ready to run yet. Even if you take a small loss, you may be better off in the long run as it will free up more time to focus on the properties that will give you a better long term ROI.

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6 aniga

This post doesn’t really talk about the VERY high inherent risks associated with buying websites, especially on Flippa. The marketplace is inundated with loads of duds and good deals are very few and far between. The scammers out there are just plentiful and are lurking in wait to grab whatever money they can off uneducated newbies. Anything below $2000 involves extremely high risk of being ripped off. I gave up on buying websites after many horror stories.

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