Flipping Websites Versus Building Your Internet Empire
7 Comments Published March 3rd, 2007 in blogging, blogs, incomeHave you ever heard of the concept of flipping houses? This is where you buy a house as cheap as you possibly can and fix it up for the purpose of selling it as soon as possible. The idea is that you find a seller who is under a lot of pressure to sell and exploit the opportunity to make a quick profit. There is a similar way to make money by flipping websites.
Flipping websites is simply the practice of finding websites for sale that are under-monetized. You buy the website at a bargain price and then spend some time working on it to build up quality content, links, and traffic. Then after a few months of increasing value, you sell the website for a nice profit.
I’ve wondered about the profitability of flipping websites, just as I’ve looked into making money through flipping houses. I gave up on the idea of flipping houses because it involved too much risk and also because of the number of shady characters there seemed to be in the business. The idea of flipping websites has a little more appeal, however.
An already established website has several advantages over one that you start from scratch. It will have a domain name that has some age to it, at least several months of existence. It will also most likely have some good backlinks and some traffic. These things will be good for search engine optimization and, of course, monetization. It may already have a modest (or better) income on which it’s value and selling price have been based. The value is usually calculated by multiplying the monthly net income of the site by at least 12 to show an estimated annual income.
There is inherently less risk in purchasing a website than in buying a titled property like a house. It can be very difficult to get rid of a house in a bad housing market and there are always numerous legal and financial issues surrounding the transaction. On the other hand, the website is likely to be much less expensive and easier to sell as the buyer doesn’t have to jump through legal hoops and also doesn’t have to be in the area.
With all this said, I don’t think I’ll be flipping websites much. Ryan at College Startup has posted an article about why he now thinks flipping websites is a bad idea. Basically, his points are the same reasons you might buy a website in the first place. The main reason he advocates not selling the websites, though, is because of the potential value.
Because of the natural growth of the internet and the always increasing number of people using the internet, the value of that website is almost sure to grow rather than decline if it’s actively maintained. This works sort of like real estate investments, but without the problem of locations losing value over time. Certainly, some niches may wax and wane in terms of perceived value over time, but with a potentially unlimited audience, websites don’t face the same problem.
Ryan suggests holding on to that website and continuing to develop it. When it’s beginning to be profitable, then is the time to hire someone to run the website for you. The benefit to this is that it essentially becomes passive income instead of you having to personally maintain the site. This strikes me as a good way to increase your overall internet profits and also to maximize the return on your investments. With some hard work and prudent investing, you can build your internet empire one site at a time.
7 Responses to “Flipping Websites Versus Building Your Internet Empire”
- 1 Pingback on Mar 4th, 2007 at 1:00 pm
Hi and thanks for an interesting post. I’m currently trying to learn about the internet real estate business so your and Ryans posts were very helpful.
Have you done any thinking on how to best develop new websites to get them of the ground so to speak? If its to be done professionally it should probably be an optimized procedure.
Anyway I’m going to return to read more about your experiences.
/jesper
Hi Jesper. I’m glad you found my post useful. That’s a great question. I’m going to do some more research on this topic and post more. I’m thinking of possibly buying a website or blog and making it a case study while I develop it. I think it would a cool project and one that a lot of people could learn from, including me. Thanks for the link, too!
It’s interesting to think about “flipping” of websites as a potential parallel to real estate. I wonder about one of your assertions, though. You say: “Because of the natural growth of the internet and the always increasing number of people using the internet, the value of that website is almost sure to grow rather than decline if it’s actively maintained.” But that same growth of the Internet is creating other web sites, potentially at an even greater rate than the overall user count is growing. If that’s the case, the traffic (and presumably value) of all but the most dominant sites may naturally follow a downward trend over time (due to dilution of the audience’s attention).
this is a subject in which i have been fascinated with over the past few months
in fact i just started a blog that i plan on using to case study each website i invest in but right now my site is having some tremendous technical difficulties
Hey Jamey. That’s a good point. There will always be lots of competition and more and more as time goes by and the internet grows. As things stand with the search engines, though, if you pay attention to the basics of SEO and also provide valuable content to your readers, readership will continue to grow for you. The search engines will be more likely to deliver traffic to the websites that have an aged, trusted domain, as well as lots of good inbound links (again, which build over time) and, of course, relevant content.
According to Technorati, there are some 50 million blogs out there now. I would guess that out of that number, very few are actively maintained or search engine optimized. Most of the competition really isn’t much competition then.
It’s impossible to say for sure, but I would maintain that the number of good sites as described above will grow at a much slower rate than the growth in the number of internet users. Sure, there will be a ton of new sites every day, but the overwhelming majority won’t end up attracting much traffic at all. Thanks for your comment!
Hi Broc. That’s a great idea for a blog and I hope you have good luck with it. As far as the wordpress problems go, try checking out the wordpress.org support forums. There are a lot of people there who are really knowledgeable about the inner workings of wordpress and they’ll be more than willing to help out. Good luck and thanks for stopping by!