For those with enough experience in building websites, purchasing an existing website and improving (or renovating this) then flipping the website for profit can be a great way to make money (in some cases serious money)and flipping it for a profit can be a great way to make money (in some cases serious money).
Whilst there is some massive potential upside with investing in website flipping, take a couple of missteps and any potential 5 or 6 figure profit target can evaporate into thin air and you are left with a costly investment could cost you tens of thousands of dollars and leave you significantly out of pocket.
Also with the increasing amount of people moving into this investment space it can be a lot harder to find a quality deal and to make a decent profit so you want to be on top of your game when website flipping.
Below we have some helpful tips to buy and flip websites for profit.
1. Have a detailed plan with goals, your budget (as well as planned allocation of funds), your flipping timetable, outlined
Time is money with websites and as soon as you take ownership of your new website, start executing your plan. Have a detailed plan in place that covers off on some of the following:
What is your aim with a potential website flip? Everyone is looking to make money but what type of money are you looking at earning? 5 figures or even 6 figures? Also over what timeframe are you looking to make your profit, 1 year, 3 years?
Knowing this information will determine the time and cash budget you will be investing in your new website.
Turning a low 5 figure website into a 6 figure website can take time and a lot of work and investment. Have a detailed plan and execute this. Plan out (as best as you can) what changes you are looking to make, how much these changes or additions will cost (if applicable), the time frame that these changes will take to be completed and improve the website, etc
Know your budget and don’t go over it (unless you are getting an awesome deal). Websites can be expensive and their values can fluctuate, particularly when Google makes a significant core update to their search algorithm which can kill traffic by up to 50%. Be wary of over capitalizing and only invest money that you can afford to invest!
After you have completed your detailed plan and come up with a budget do your best not to exceed this. By going over your budget this takes away money you will be using to grow the website such as content or SEO improvements.
Your budget should also have allocations for capital to be allocated to ongoing capital expenditure such as content, SEO, social media, advertising, etc.
Questions you should be asking include: How much are you going to spend on content? How much will you be allocating towards web design or SEO? What about software or hosting costs?
If you are going to outsource your content, who is going to be doing this? What is the approximate cost per article going to be? Are you going to be editing these outsourced posts and uploading these to the website? Or do you need to budget for an editor to handle this task? The more detail that goes into this easier your path to growing your new website purchase can be.
Also know exactly how much you can afford to lose if the worst case scenario occurs and the site that you purchase absolutely tanks and the site becomes basically worthless. However there is also a chance that your purchase may not pay off (given the fickleness of Google updates) or at least take longer to reach your sales target so as with any investing, don’t invest money that you can’t afford to lose.
Know your timeframe to wish to flip your website by and aim to get everything you can out of this timeframe.
Ideally you would want to work with at least a 12 month time frame however some good improvements can be made in a 6 month timeframe. Given most websites are valued on a multiple of the sites last 12 months of revenue using 12 or 24 months is a good guide to implement your changes.
Some changes can be implemented quickly (ie changing website theme or host to a faster alternative) and whilst others (such as ranking content) will likely take months before changes are seen.
Also if you have a busy job and want to spend time with your family then it’s likely any work on the new site will be limited or you will have to outsource most tasks so this would have an effect on timeframes to implement and see any changes. If you had a significant budget to outsource then this wouldn’t affect your timeframe that much however if your budget is limited bear this in mind when planning your timeframes.
2. Set up an initial plan of attack/out any easy wins to target
Further to the above point, you want to get moving as soon as possible to implement changes to your new website purchase.
This might be completing a detailed keyword analysis for low hanging fruit that you believe you can rank for quite quickly and outsourcing content around your new list of keywords.
Alternatively this could include a website design overhaul or even a replacement of the current theme to improve site speed or to keep readers or viewers on the site longer.
When looking at a potential website purchase, the more experienced you are the easier you can see some changes you can implement straight away to boost revenue or traffic.
This could include changing website ad management providers, changing hosts, changing the website layout or website theme, adding an email opt in to build an email list just to name a few.
Alternatively if you aren’t as experienced (or someone with less time) you can look for programs such as purchasing Mushfiq Sarker’s excellent product Easy Wins. The product outlines over 200 potential “Easy Wins” that you can look to implement (if not already in use) to boost the revenue or traffic on a potential website.
3. Know your strengths and play to these when looking for a potential website to purchase
If you are a newcomer to the online/niche website world you are like a sponge absorbing all this information however you may not be fully dialed in on your strengths and weaknesses in the online area.
For beginners or new starters in the website game we believe you should do as much of the website work as you can yourself (at least in the short term) to learn and to get a feel for the website. To get a feel of what works, what doesn’t, what content or social media posts move the needle, etc. If you outsource everything straight away it’s harder to build your knowledge, to understand what is working, whether your content providers are giving you great content, whether other outsourced workers or virtual assistants are working as they should.
Basically we suggest you spend a few months “getting your hands dirty” or “going under the hood” and once you have a handle on things start outsourcing tasks.
As a beginner you’ll want to have at least a basic understanding of SEO, Social Media, Google’s relevant suite of products, writing content, online legal information, email lists and affiliate marketing. Get confident with this then look to outsource where relevant.
Also if you are new to the website game and looking to dip your toes into investing make sure you do plenty of due diligence and only invest a smaller amount of capital towards this.
For those with a bit more experience with building or running a website, double down on your strengths. For example you might be an amazing content writer and you would look for a suitable website to purchase (in your ideal niche) that you can crank out quality content in a short amount of time which could add tens of thousands of dollars to your website’s value.
Alternatively you might be a wizard at SEO and would be looking for a website where you can improve any underperforming or lacking SEO and get previously low or unranking content rocketing up the Google Search in no time at all which could also add tens of thousands of dollars to your website’s value.
4. Do extensive due diligence on regular website sales
Firstly you want to have a wide net to have access to potential website buying opportunities. Most people looking to buy a website have subscribed to the mailing list of all major marketplaces and have accounts with these organizations. If not, look at websites such as Empire Flippers or Flippa for website sales in a similar niche you are looking at targeting and subscriber to their mailing lists if you haven’t already.
If you haven’t already look to join Facebook groups such as Website Flipping or Niche Website Flippers to see what sales are being completed and in what niches and if anything is up for sale.
Moving onto website due diligence for any potential buys, some of the information you would want points you should be looking for include some of the following
- Revenue and profit (or loss) history
- Detailed Analytics of the website
- Traffic history (any recent gains or losses)
- Where is the traffic from (organic, social media, etc)
- Keywords the site currently ranks for
- Backlink profiles (also are PBN’s used for the site)
- Content analysis and who writes the current content and what is the current content plan
- Email list information (if applicable) and analytics on this such as open rates, regularity of emails sent
- Social media channels and any relevant analytics for this
- Why is the current owner selling?
Mushfiq Sarker also offers a product called Easy Diligence which has a list of questions to ask in the due diligence process.
5. You’ll want a detailed understanding of the target niche, topic or sector you are going to purchase your website in
If your budget is high then you can outsource a lot of the work on your potential new website and if you aren’t an expert or have a lot of knowledge on the topic you can get away with this.
If you don’t have the budget to put towards content and will be doing most or all of this on your own it helps to have a decent understanding about the niche or topic.
On a basic level you’ll want to knowledge such as:
- Is there money in the niche? For example do readers or consumers in that particular niche spend money? Ranking issues aside there is more money in the finance niche rather than the goat herding niche.
- What type of content ranks for these competitor ranking keywords? How long is the content, are the pictures or infographics in their content?
- Use a research tool such as Ahrefs or SEMrush to analyze this niche and any potential competitors. Looking for potential keywords and potential link opportunities.
- Is the niche dominated by big players (such as CNET dominating the technology and electronics niche).
If you have more experience with websites (and various niches) you can use this experience to go deeper looking at points such as:
- Know the RPM’s for the niche
- How to get quality writers or content in this niche,
- Know all the quality affiliate programs in this niche
- How quick can you rank content with the existing site based on previous experience
- Whether changing the ad manager would lead to an increase in revenue
6. Know all your potential selling costs
Know how (and where) you will be selling your website. You might get lucky and find a great buyer in a website forum or you might get a random approach, however the more likely situation is that you will have to engage in a broker to flip your website. Know how much the fees will be for the prospective marketplace you are looking to engage.
Some website sale marketplaces have higher brokerage fees than others however they likely have a bigger reach and also the opportunity to get a higher sales price.
Some marketplaces offer little to no due diligence while others require extensive due diligence before listing a website so take all this into account when choosing the location for your website flip.
Once you’ve set a target website revenue multiple to sell at (and website value) know what the sales and brokerage costs will be and build this into your profit margin.
Also depending on your location (and financial circumstances) you may have taxation issues to deal with on any successful website flip. Reach out to a professional tax or financial professional in your country and state of residence to determine any potential tax issues.
7. Other points to consider
Leave some upside where possible
If you milk every possible piece of revenue or upside this can affect the sales multiple potential buyers will offer. Leaving further upside could include email lists, ad managers, affiliate selections, course offerings, etc. Yes by all means do what you can to maximize your gains however you may not want to squeeze every drop, it may pay to leave a little juice for the next buyer.
Finance options to offer when purchasing the website
Depending on the size of the website (and your financial situation) you may be able to get a little creative with your purchase financing options. You may be able to offer a higher overall multiple (and final figure) by using options such as vendor financing or monthly or quarterly payments above and beyond the advertised sales prices.
You could back yourself to increase traffic and revenue straight away which will cover this increased repayment amount. Alternatively if you pay cash the vendor may be open to accepting a lower purchase price than advertised.
If you don’t ask you won’t know so don’t be afraid to reach out to the vendor with some creative finance options though bear in mind upfront cash payments will likely beat most financing offers.
Where possible cultivate a list of online contacts
Get to know some of the people from the website brokerage sites such as Empire Flipper or Flippa. Make yourself known on popular niche website Facebook accounts or even in popular forums.
Buying then flipping a website can be a great way to make some very healthy profits (at least relative to other investment classes such as shares or property). Don’t just jump into any deal that comes your way just because it looks like a good price at first glance.
The better you become in the due diligence area the quicker you can identify potential investment opportunities, waste less time sourcing a deal and focusing more on quality investment options and start growing your investment portfolio.
Ideally you’ll have experience running or building a website and don’t be scared to take that leap to build your website portfolio. Do your homework, don’t invest more than you can afford to lose and if the deal looks good then take that shot! Before you know it your net wealth will be growing and you will be well on your way to your version of financial independence.