One of the ways I’ve made a lot of money has come from the process of buying and selling websites. My largest sale so far was in a deal worth six figures (see details here on how to sell a website).
This year I’ve also had the goal to buy at least $100,000 worth of websites and even though I have been buying websites this year I generally keep the URL’s of these websites secret for competitive reasons. Today I want to actually talk about a website I just recently purchased called Copycat Crafts and explain some of the things I look for when I buy websites. I’m also going to cover this website’s progress as an ongoing case study each month explaining what I did in the previous month, why I did it and how much the website has earned etc. First let me explain why I bought this website.
Step 1: Look For Potential
When I buy a website I try to find properties that have room for improvement. If you’re shopping for real estate and see a kitchen that looks straight out of the 70’s, you know that if you update the kitchen properly you can add a lot of value to the house. In the same way you want to apply this mentality to websites. In the case of Copycat Crafts the website already had a great foundation to build on, the old owner simply needed to focus on other aspects of her business and didn’t have time to work on this website. In a future case study entry about this website I’ll explain what I’m doing to grow the website, but part of what attracted me to the website in the first place is because of it’s potential to grow into a true authority website that isn’t too reliant on search engine traffic. To continue my string of analogies you can consider websites like investments and with any investment strategy it’s important to balance your portfolio. With websites I prefer to have some variety so that if any one property suffers a drop in income or traffic my business can continue to function.
Step 2: Look For Ease Of Management
Copycat Crafts already had a writer being paid to help manage the website and whenever that is the case it makes website management much easier. She will continue to write for the website and will scale her effort based on the number of articles I’d like her to write as well as the other aspects of helping to manage the website. When you’re looking at buying a website it’s very important to consider how the content is currently being created. If the owner is doing all the work you want to know how much time they spend on the website and whether or not it’s something you could easily outsource to someone else as well. It would suck to buy a website for thousands of dollars and then not have enough time or the expertise required to run it effectively.
Step 3: Look At The Earnings History And Website Analytics
Copycat Crafts was started back in the fall of 2010 so it hasn’t even been around for a year but it already has been making a few hundred dollars per month. I’ll cover the income and how I plan to increase it in a follow up post. When you look at a website to buy the amount of money it’s making (and where it’s coming from) will play the largest role in determining the price the website will sell for. If there isn’t any income then the next step would be to look at the traffic and try to determine how much money could be made from the existing traffic. One way to do this is to look in the Google Adwords tool to determine how much advertisers are spending for various related keywords or do a search for the keywords to determine how many advertisements come up in the search engine results and try to judge demand that way.
Step 4: Look For Indicators Of A Bad Website Property:
Much like water leaking through a foundation can be incredibly expensive to fix if it isn’t caught in a home inspection you can also waste your money if you buy a website built on a weak foundation. If you’re looking at a website that gets the vast majority of it’s traffic from search engines it’s incredibly important to ask the owner how they built the links to their website as well as doing your own search of their links using a tool like Yahoo Site Explorer or a more comprehensive tool like SEOmoz. Another indicator of a potentially bad website property is when the seller is claiming the earnings are averaging $1,000 per month (for example) but when you look at the income history it’s only ever had one $1,000 month. You should almost always value a property based on an average of the trailing twelve months of income as this will help account for seasonality in earnings and provide you a more stable picture of what it can earn.
Step 5: Never Risk Money You Can’t Afford To Lose:
This is a step that I prefer to live by because even though I’m self employed I’d like to think I’m fairly risk averse. After all, I didn’t make the decision to become self employed – I was fired. So when I decide what website to buy I like to think about it from the perspective of what would happen if the website stopped making money? With this attitude I’ve found that the current maximum I’d be willing to spend on any single website property is around the $50,000 mark. This number will be different for everyone and I don’t want to discourage anyone from the idea of buying websites as a way to make money because you can buy websites in several different price ranges. Last summer I bought a website for $500 that has already earned me close to $5,000. There really is opportunity at every different price point.
Want To Find Websites Worth Buying?
I spent 5 months and thousands of dollars working with a team of developers to create a software based solution to the problem of finding websites worth buying. This tool does a great job at automating part of the research process and I think it has a lot of value for you.
New Copy Cat Crafts Case Study Updates:
Update: Since publishing this blog post in 2011 I’ve gone on to share multiple new case study updates. Be sure to read them all below to see how I was able to take this website and make more money with it:
Introduction – How To Buy A Website (You are reading this now)
Part 1 – Two strategies to employ after you acquire a website
Part 2 – How I drastically increased the income
Part 3 – Long term income case study results
Part 4 – $4,000 Investment Paid Off
Part 5 – How to buy websites and profit in less than 12 months
Have Any Questions About Buying Websites?
Don’t be a lurker! Ask me a question about buying websites and I’ll give you an answer. I respond to nearly every comment tossed my way. I’ll see you in the comments below.