Why Investing in Websites Can Be Lucrative

9 min read

If you want to increase your income, you’ve got a few options:

1. Work more hours.

2. Work at a higher hourly rate.

3. Buy assets that generate income for you.

I personally prefer option (3) because it allows me to increase my income without (1) spending more time working and (2) it doesn’t require me to work for someone else.

A few examples of assets I own that generate income for me include:

  • Dividend-paying stocks: Every three months I receive a dividend payment from stock index funds I own. This is completely passive income that requires no work on my end.
  • REITs: A REIT is a real estate investment trust, which is a company that invests in income-producing properties. I own a handful of individual REITs that all pay me a dividend either every month or every three months. Similar to dividend-paying stocks, this is a passive income stream for me.
  • Websites: I own a handful of websites that all earn money through banner ads, affiliate links, or digital products that I’ve created. This is a semi-passive income stream for me because I do have to update and add content to the sites to increase their income, but they’re still able to earn money for me while I sleep.

If you’re looking for more examples of assets, check out this list of 19 different assets you can invest in to build wealth

Websites are my favorite type of income-generating asset to own for two reasons:

1. Websites provide a massive return on investment relative to other asset classes.

A dividend-paying stock or stock index fund will typically pay an annual dividend yield between 2% and 3%. For reference, let’s consider VYM, the Vanguard High Dividend Yield ETF. It currently has an annual dividend yield of 3.2%. This means that if you invest $10,000 into this fund, you’ll receive $320 in dividends each year.

On the other hand, websites typically sell on marketplaces for 25 times their monthly profit. So, a website that generates $400 each month will typically sell for about $10,000. This means that if you invest $10,000 into a website and the income remains stable at $400 per month, you’ll receive ($400 * 12 months) $4,800 over the course of a year. That’s 15 times more than the stock index fund.

2. Websites have the potential to grow at a much higher pace than other asset classes. 

When you invest in a dividend-paying stock index fund, that fund might increase their dividend payout by 5% per year, on average. So, if you receive $320 in dividends in year one, you may receive $336 in year two, then $353 in year three, then $370 in year four, etc. 

Conversely, a website has the potential to grow at a much higher pace. For example, the following chart shows how much I’ve made each month from websites since I first started back in the end of 2016:

Here’s a look at my total annual income from websites:

2017: $2,188

2018: $10,059

2019: $27,000 (projected)

The growth rate was 359% from year 1 to year 2 and 168% from year 2 to year 3. I hope to earn around $50,000 from my portfolio of websites in 2020, which would represent an 85% increase from year 3 to year 4. 

Obviously income growth fluctuates from one website owner to the next, but the increases that I’ve seen and expect to see in the future are orders of magnitude higher than that which I’ll see from dividend increases.

What to Know Before You Invest in Websites

I’ve painted a rosy picture of website investing up to this point, but I’ll be the first to acknowledge that it comes with a couple substantial risks.

1. It’s easy to get scammed.

Whether you buy a site from an online marketplace or independently from an owner, it’s easy to get scammed. An owner can easily lie about the amount of traffic a site receives along with how much money the site actually makes. So, before you purchase a site, you need to verify both the site traffic and the monetization.

You can verify the site traffic by asking the owner for “Read Access” to their Google Analytics account for the site. This will let you see how much traffic the site is actually receiving along with the sources of traffic. If the owner says they don’t want to grant you access to the dashboard, that’s an immediate red flag that it could be a scam.

You can verify the site’s revenue by asking for both recent and historical screenshots of Amazon Affiliate dashboards, Mediavine dashboards, etc. to see the amount of ad revenue and affiliate income the site is actually generating. Again, if the owner is not comfortable doing this then you probably shouldn’t proceed with the sale.

Any website owner who genuinely wants to sell their site and is not running a scam will be more than happy to share read access to their Google Analytics along with screenshots to prove their earnings.

2. Growth is not guaranteed.

Even if you’re able to avoid a scam and successfully buy an income-generating website, there is no guarantee that you’ll actually be able to grow the monthly revenue and it’s possible that revenue will even decrease.

For example, suppose you buy a site that receives 75% of its traffic from Facebook and Pinterest. If you have no idea how to drive traffic to the site using these two social media platforms, you could experience a massive drop in both traffic and revenue.

Or suppose that most of the traffic to a site comes from organic search and you don’t know anything about SEO (search engine optimization). In this case, it could be hard for you to figure out how to grow organic traffic to the site and your monthly revenue may flat-line or even decrease.

This is why it’s so important to analyze the traffic sources before you buy the site. You need to understand how people are finding the website and you need to be sure that you’re able to grow (or at least maintain) that traffic.

How to Find Websites to Invest in

Once you’re aware of both the potential upside and downside of investing in websites, all that’s left to know is where to find sites to invest in.

There are three popular ways to find websites for sale:

1. Search on Empire Flippers: One of the most popular online website marketplaces is Empire Flippers. This is the premium place to go if you’re looking to buy a website that is generating at least $500 per month in profit.

The good thing about Empire Flippers is that they’re a reputable company with an excellent reputation and they’ll help you through the entire website purchasing process. You’re highly unlikely to get scammed on their platform.

The bad thing about Empire Flippers is that you’re highly unlikely to find any bargains. In fact, most of the sites listed on their platform sell for between 30 and 35 times monthly profit.

2. Search on Flippa: Another popular online website marketplace is Flippa. This is basically the Wild Wild West of website buying and selling. Anyone can buy or sell a site on their platform and you’ll find sites in hundreds of different niches, all with different monetization methods.

The good thing about Flippa is that it can be an awesome place to find good deals. If you’re looking to buy a site for as low as 10 to 15 times its monthly profits, this is the place where you can make that happen.

The bad thing about Flippa is that it’s crawling with scams and low-quality websites. If you do decide to purchase a site from Flippa, you should look at the seller’s background on the platform to verify that they’ve bought or sold at least one site before. In addition, you should ask for Read Access to the site’s Google Analytic dashboard along with screenshots of recent earnings.

3. Contact owners independently: Instead of using online marketplaces, you could just contact a website owner independently via a cold outreach email and ask if they’re willing to sell their site. 

The good thing about this approach is that you have a higher chance of getting a bargain and you’re able to avoid any buying/selling fees associated with online marketplaces. 

The bad thing about this approach is that you’re at risk of getting scammed since you don’t have a dedicated third party platform to moderate the deal. Also, it can be difficult to verify the owner’s reputation and history.

My Personal Experience with Buying a Website

I recently bought my first website ever, so I thought it would be helpful to share my personal experience with the process.

My motivation for buying a site

The reason that I wanted to buy a site is because of the two details mentioned previously in this post:

1. Websites can offer extremely high returns on investment.

2. Websites have the potential to grow profits substantially over time.

Since I have experience with starting and growing four different websites in various niches, I have a good understanding of the basic process behind growing and monetizing sites.

I also found the idea of buying a site more appealing than starting one from scratch because it often takes six to eight months to earn any income from a new website. Through buying a site that is already established, I could skip this initial ramp-up period and start earning money immediately. 

How I found a site to buy

When I decided that I wanted to buy a site, I knew that I would either use Flippa or contact an owner independently. I ruled out Empire Flippers simply because the cheapest sites they sell on their platform tend to be $25,000 or more. That was a bit more than I wanted to spend on my first site ever.

So, I tried my hand at Flippa for a bit. Through extensive research I actually found a couple legitimate sites and even made a couple bids. Unfortunately, other people on the platform were also able to find these sites and bid the prices to above 30 times their monthly earnings. This was more than I was willing to pay.

Eventually I started sending cold emails to various website owners through their site contact forms asking if they’d be interested in selling their site. I emailed dozens of owners, received responses from about half of them, and eventually found one owner who was willing to negotiate significantly on price because they wanted to sell the site and move on to other ventures.

The details on the site

To verify the traffic and revenue for the site, I actually befriended the owner on Facebook and we were able to talk back and forth via Messenger. The fact that we could both put faces to names also helped us build trust and made the entire process much more comfortable.

The owner was able to grant me read access to the site’s Google Analytics dashboard and provided screenshots for both their ad platform and their Amazon Affiliates account so I could see exactly how much the site was making from these two sources for the past 12 months.

Here are some basic details about the site:

Category: I won’t reveal the exact domain name of the site, but I will say that it’s in the food niche.

Average monthly traffic: 25,000 sessions

Traffic sources: 55% organic search, 30% social, 15% other

Average monthly income: $700 (via banner ads and Amazon affiliate links)

How much I paid

Based on the monthly income of $700, a valuation of 25 times that amount would be $17,500. The initial offer that the site owner gave me was $12,000, which was about 17 times monthly earnings. This was a pretty good deal, but because the owner had already revealed that they wanted to get the site off their hands so they could focus their time on other projects, I knew that I could probably negotiate a lower price. 

We went back and forth for a bit and I was eventually able to get them to come all the way down to $7,000, which is the final price we agreed upon. This meant I was able to buy the site for just 10 times its monthly earnings, which was an incredible deal for me.

To broker the transaction, we used escrow.com. This was a simple process:

1. I deposited the $7,000 in Escrow.

2. The site owner transferred both the hosting and the domain name over to me.

3. Once I had the hosting and domain in my possession, I released the funds in Escrow.

How I intend to grow the site

Using my knowledge in SEO, I plan on growing the organic search traffic to this site considerably by adding new SEO-optimized articles and updating existing ones.

With increased traffic, the site will earn more revenue naturally with ads and Amazon Affiliate. In addition, I plan on adding several different affiliate programs to the site that the owner had not been using previously.

I suspect that I can increase the total affiliate income by $200-$300 per month fairly easily, and it’s my hope that I can start generating $1,000 per month from this site within just a couple months. 

How I find time to manage multiple sites

For those keeping track, the addition of this website to my portfolio brings my total websites under management up to five. The only way that I’m able to effectively manage and grow five sites is by relying mostly on SEO for traffic. Let me explain.

Earning income with websites is a straightforward process:

1. Drive traffic to your site.

2. Monetize that traffic in some way.

That’s it. And my preferred way to do that first step – drive traffic to a site – is through writing articles that are SEO-optimized. By doing this, I can write an article one time and have it rank on the front page of Google, then simply sit back and earn free recurring traffic each day.

A couple of my sites actually require less than two hours of work per week, but for the three that I’m actively growing I like to publish between two to three articles per week on each site. This is all I need to do in order to grow each site steadily over time. And because this is now my full-time job, I have plenty of time to produce this many articles per week.

Related: If you want to learn how to use SEO to drive traffic to your website (no matter what niche it’s in), I encourage you to check out Simple SEO for Bloggers – a course I created that teaches you everything I know about SEO along with my exact technique for ranking articles on the front page of Google consistently.

Should You Invest in Websites?

I personally believe websites can be fantastic ways to generate income. They’re infinitely scalable, they give you the opportunity to earn money from your laptop, and they have the potential to grow tremendously over time.

However, you must understand the core idea behind how to drive traffic to websites and how to monetize that traffic before you go out and buy a site. If you’ve never run a site before, then buying one is likely a bad idea because you won’t know how to grow or even maintain the site’s traffic and income. This would make it a losing investment for you.

If you’d like to gain an understanding of how to earn money with websites, I recommend starting your own first. By doing so, you get to experiment with growing a website without spending a significant amount of money.

Then, once you’ve had success with one site you can consider buying another site to increase your income, rather than starting another one from scratch.

Investing in a website can offer incredible investment returns, but keep in mind that it comes with risk and it does not offer a completely passive income stream. 

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