One of the most common questions I get from friends is about how I got started with buying, optimizing, and selling websites — aka, “flipping” or “investing in online real estate”.
I’m grateful that I’m finally able to do this full time (I wrote my abbreviated story on my About page), and there are huge opportunities in this space. I think my success of being able to work for myself in this industry comes down to:
- Doing a ton of reading (learning from the successes and failures of others) and…
- Applying those lessons to my own projects.
I made this resource page for people who are thinking about getting into website flipping, with the hope that it can be the most comprehensive guide out there. At the very least it can be a starting point for people who want to learn more about the online real estate game.
** If you have advice on how I could expand particular sections, or have any resources that are share-worthy, please send them my way! My email: mike (at) returnonconversion (dot) com **
Table of Contents for Buying, Selling and Flipping Websites
Introduction to Website Flipping
Important Points to Consider
Where to Buy a Website
What to Look for when Buying a Website
Due Diligence and Avoiding Scams
How to Optimize a Purchased Website
How to Secure Your Digital Asset
How to Sell Your Website
Becoming a Digital Nomad
Introduction to Website Flipping
Website Flipping can be simplified into three parts:
- Buy a site that is undervalued / underoptimized / undermonetized
- Optimize the site to increase monthly profit.
- Eventually sell the site for more than what you purchased it for.
Note: Many people choose to skip or postpone the 3rd step of selling the site, instead holding onto a portfolio of sites and collecting the monthly cash flow to support their lifestyle and finance further website purchases. (I subscribe to this ‘buying and holding’ approach.)
Building vs. Buying a Site
If you’re just starting out in online business, and are considering buying an established website, then you should first ask yourself the question:
Should I buy an established site, or build my own from scratch?
There are pros and cons to each side, and it’s hard to know where to start. This article, Debate: Buying Sites vs. Building Sites, can help guide you in the right direction. In this debate between Chris Guthrie from UpFuel and Spencer Hawes from Niche Pursuits, they highlight the pros and cons of each, as well as how your skill-set and resources might lead you to different conclusions and paths.
My Thoughts on Building vs. Buying
I started out building WordPress websites (first a personal travel blog, then a few sites for others), and those experiences taught me a lot that helped with my future purchases. At the time, I didn’t have a lot of money set aside that I could invest in buying an established site, so it kind of set my priority to making sites.
The downside to building is that it’s likely to take you some time to figure out a niche or business model that works. You may spend hundreds of hours on a project or site that doesn’t take off, or get stuck in the famous Google Sandbox Or, you may hit on a great idea with your first one.
If you’re just staring out and have more time than money, building is the obvious choice. It’ll cost you less money, and you will be in full control of the project you choose.
That said, there is much to be said for going straight to buying an established website, especially if you’re a fast learner and have capital you can afford to invest (and possibly lose). This route is potentially more costly, but I would argue a quicker education and a faster way to earn an income online.
Important Points to Consider
Like the real estate market, online real estate is a lucrative market, and one where plenty of people have gotten rich. Potential investors are attracted to the idea of making passive income and hitting big returns.
But like any sort of investing, you should only invest money that you are prepared to lose. The returns in online real estate can be much higher than other types of investing, but so are the risks.
Newer sites with low income or requiring significant upkeep may sell for between 10 and 20 times monthly net profit (this is known as the “multiple” and often abbreviated as “10x” and “20x”), while older, established sites with automated processes and passive income can sell for as much as 30x or more.
Let’s say you buy a site for 15x monthly net profit, and everything – costs, traffic, google ranking, earnings — stays exactly the same. You could expect to make your original investment back in 15 months, and everything after that would be profit.
However, what if the site’s primary source of income or traffic were to fall through?
This could happen if your Google Adsense account were suspended, or your site suffered a Google penalty for some reason and you lost organic search traffic. In that case you might lose most or even all of your monthly profit, and consequently the site’s value.
That’s why it’s so important to do due diligence before the sale: to minimize the risk of losing your investment and returns.
To compare with an example in traditional real estate:
If you bought a rental property for $500,000 and the market takes a dive, you might still be able to sell that property for $300,000 and recoup some of your original stake.
On the other hand, if you buy a website for $500,000 and the next month Google knocks you off the front page for purchasing backlinks (even if it was the previous owner who bought the links), the resale value of your website could drop to near zero. (* Although there are ways to appeal google penalties)
TLDR: The returns can be higher than traditional investments, but so is the potential risk.
Where to Buy a Website
Flippa is the largest marketplace for buying and selling websites, period.
Think of it as the eBay of website sales. Someone lists a site for auction for a specific time period, and many people bid on it until the auction time is up. Similar to eBay, the seller may specify a reserve price (so the site goes unsold if it isn’t met) and a ‘Buy It Now’ price to end the auction early.
The sites listed on Flippa run the gamut, so best do your due diligence and research the common scams to make sure you’re really getting a good deal.
As brokerages go, Empire Flippers are the fastest growing and most respected in the mid range. The sale prices are usually between 20-30x monthly net profit. Most of their sites are in the $10K to $100K range, but they sometimes sell sites as low as $4,000. In the past year they have been moving up the value chain to bigger sales, and now have listings for sites up to $1M.
(Note: To protect buyers and sellers, Empire Flippers only disclose the URL of sites to potential buyers who have made a 5% deposit.)
Digital Point was once maybe a better place to look. Now it’s mostly very low-end sites with not a lot I can recommend, but you may get lucky and find a gem in the rough. One nice point is that forum members like to point out why certain listings are scams, so it can be fun and educational to read the comments.
I doubt you’ll want to start here, but it’s good to be aware of the players at the top end of the market.
FE International (formerly Flipping Enterprises) is a higher end brokerage based in the UK. Their sites generally start at $50K on the lower end and go upwards of a $1M.
Quiet Light Brokerage is a very high-end brokerage. Current listings are between $200,000 and $2.5M.
What to Look for when Buying a Website
Finding the right website is maybe the most time-consuming part of the entire process. It’s also the most important.
Choose the wrong site, and you’re in for an uphill battle. Things like spammy backlinks, duplicate content and over-optimized SEO could get you a penalty from Google that destroys your site’s search rankings (and therefore your earnings).
You could also get scammed or buy a lemon. The internet is rife with scammers and the largest marketplace for websites is no different. The best bet is to learn about common scams and ways that sellers can manipulate their site to make it look better than it is. For more on this, see Due Dilligence below.
So what should you look for?
Individual buyers will differ in their strategy, but there are some general things to look for in a website that can increase your chances of buying a “good” site.
I recommend looking for sites in an evergreen niche with a long history (at least six months to a year) of traffic and profit, quality backlinks, and solid original content written by established experts (or at least people who are passionate about the topic). You should also pay close attention to how much work is involved in the site, so you don’t end up just buying yourself a job! Maybe most importantly, you should have a clear vision of the strategies you will use to optimize the site and increase revenue. See below for more detail on each of these criteria.
Pick an Evergreen Niche
Sure, that dating website for supporters of Bernie Sanders might be earning some adsense money right now, but what is it going to be worth when the novelty wears off?
It’s important to think long-term and choose your niche wisely.
Here are two examples of a niche you might want to avoid and one that might be worthwhile:
- A site featuring guides about a popular new videogame.
The site is only 3 months old but already is averaging 50,000 organic hits per month.
Thoughts on niche selection: You may make some money in the short term, but the resale value is dependent on the video game’s popularity, which is out of your control and likely to be short-lived.
Verdict: Unless you’re skilled at quickly flipping sites for a profit, stay away from this one.
- A site about brain training, with articles about how to increase memory and IQ score.
The site is 6 years old and despite not having been updated in 2 years, still gets 20,000 organic visitors per month.Thoughts on niche selection: This is an evergreen niche, and one that has been increasing in popularity in the past few years. There’s also many legitimate affiliate products and programs that you could sell in this niche (Luminosity, etc.).
Verdict: A good site to look into further.
Backlinks are links from outside sites that direct people to your site. The quality and quantity of these links are a major factor in how much search traffic Google and the other search engines send your way, so you want them to be good.
There are a number of tools out there to check what backlinks are pointing to the site. Here are the major ones:
And a few others that are becoming more popular:
Are they from unrelated niches? Are they from spammy looking sites, or sites that have long lists of links?
These are BIG red flags. Look for links from quality sites that provide value to what the visitor would be searching for.
Jon Haver from Authority Website Income goes much more into depth about backlinks in this great article.
Traffic History / Quality / Quantity
Any seller on Flippa or through any of the marketplaces should have Google Analytics installed and be willing to give you read-only access. (If they don’t have it installed, or refuse to give you access, then move on: HUGE red flag.)
Stats you should look at:
Time on site and bounce rate: How long are people interacting with your site?
Page views: How many pages does the average visitor look at before they leave?
Demographics: What country does the majority of traffic come from?
(Traffic from the US, for example, will earn more per ad click than traffic from a developing country. It could also be a red flag if you have a high percentage of traffic from a country that isn’t targeted on the site.)
Here is a roundup post from the Empire Flippers blog with lots of of great tips about what to look for and avoid in terms of SEO when buying a site.
Automation / Workload
Many people think of websites as passive, but the truth is that there are very differing levels of work depending on the type of site and business model.
For example, here are two sites for sale on Flippa. Which one would you choose?
- A site that makes $500 net profit per month and requires 15 hours of work per week.
- A site that makes $500 net profit per month and requires 1 hour of work per week.
It’s easy to see which one is a better buy. The first one has you effectively valuing your time at minimum wage, while the second one is a very good return on your time (unless you’re Bill Gates).
Yet so many people don’t think about these questions before they buy:
How much work is required to keep the site at its current earnings?
How much work would be needed to optimize the site and boost the earnings?
If organic traffic is part of the strategy, you should also think about how much work you’ll need to do to keep the site updated and ranking in Google.
Another important question is to figure out whether the process comes with the sale, or if there are things that you’ll have to figure out. See this story from Dave Schneider of Self-Made Businessman for an example of what can go wrong.
A website may have strategic value because it complements a business that you already own.
You own an e-commerce site that sells pet care products. You see a site for sale about how to train dogs, and recognize that it is potentially more valuable to you than someone without another site in the niche. If you bought the dog training site, you could sell your pet-care products to your dog training customers, and vice versa, thereby increasing the value of the purchase.
Some questions for recognizing strategic value:
Would purchasing the site have any benefits to another website or business that you own?
Do you own other web properties that target a similar niche or demographic?
Opportunities for Growth
Some people are attracted to online investing because it has the potential for relatively passive returns. However, like flipping houses, the real money is made when in “fixing up” or optimizing sites: increasing conversion, introducing new products, creating joint ventures, etc.
After increasing the monthly profit, you should be able to ‘flip’ the site for a higher sale price.
For more, see How to Optimize a Purchased Site
Tools to Help You Find a Site Worth Purchasing
Because the entry to barrier of selling a site is so low, you often have to sift through a lot of junk to find something worth buying. FlipFilter is one of those ideas that I wish I’d thought of, and it takes care of this problem. It scans website sale listings all over the web and puts them all in one place, where you can sort them by domain age, earnings, views, and many other variables.
Due Diligence and Avoiding Scams
What is due diligence?
A website seller can claim that he’s making x dollars per month, but who is to say he’s telling the truth?
Flippa, the largest website marketplace, has addressed this concern by adding verified Google Adsense and Analytics to their listings, which helps. But with sites where the earnings are from other types of monetization (product or affiliate sales, sponsored posts, etc.) how do you know if the authors claims are true?
According to Flippa’s terms and conditions, by submitting a bid, you are legally obligated to purchase the site at that price, even if after purchase you find out the site is not what you thought it was.
(In reality, for various reasons caused by both buyers and sellers, some sites that get “sold” don’t work out afterwards and end up re-listed. For example, if you found out the site they bought had falsified earnings during the transfer period, would you still pay? In fact this happened to me. I’ve learned from my mistake, and will share the story on the site soon.)
The point is you should be doing your due diligence before entering any bid.
Think about it this way: if you were in the market to buy a used car for $5K to $10K, wouldn’t you do some research and try to find out what car would best fit your needs, and where you could get the lowest price? But many people do even less research when dealing with website purchases.
According to Flippa’s CEO Dave Slutzkin in 2011*
“the research indicates that 50% of website buyers spend less than one hour verifying seller claims to key metrics such as revenue and traffic prior to purchase. Only 13% of website buyers actually discussed the website with the seller in person or over the phone.”
Website brokers like Empire Flippers also verify the sellers and the earnings claims, but the final responsibility is with you, the buyer.
The Domain Diva gives a very good overview of Due Dilligence in her guest post on the Flippa blog. There’s also a great post on Wired Investors about some of the scammy sites that people get taken in by on Flippa. They also have some interesting insights into the mindset of the scammer, which will help you avoid being scammed yourself.
Here are few threads with stories of close calls that show how far some sellers will go to manipulate the buyer:
Due Dilligence Reports
If it’s your first site purchase and you’re new to the space, you might consider paying for a due diligence report from Centurica.
How to Optimize a Purchased Website
Optimizing a website is not unique to flipping, and is such a huge, broad topic that I was hesitant to include it here. I’ll start with some basic links and I expect this section will grow with time.
Case studies can be invaluable to get insight into the way the ‘pros’ think about the sites they buy and the reasons they choose certain optimization strategies over others. Here are a few of the best I’ve found:
The author bought a site from Empire Flippers and tripled the site’s earnings in the first three months. This is the case study that inspired me to start writing on this site. The author also shares other in-depth articles on his own blog.
This video is from Chris Guthrie, who talks about optimizing one of his sites, Copycat Crafts.
This is a fantastic, in-depth case study from FE international, a brokerage for selling larger sites (6 figures and up). It’s very in-depth and technical, and offers a great perspective on how to improve technical SEO on a larger website.
Finally, here is my own case study of how I increased net profit by 56% in one month on a recent Flippa purchase.
Focus on Easy Wins
After purchasing a website, your first order of business should be to focus on the “easy wins” – things that, when optimized, bring disproportionate results. Here are some common examples of easy wins:
Ad Placement and Alternate Ad Networks
For sites that primarily rely on Adsense, you’ll want to optimize ad placement first.
You also might look to supplement Adsense with other ad networks (Taboola, etc) or even look for a private ad network in your niche.
These two things could potentially double or triple your advertising income with little effort.
Here are a few of the best articles out there on ad placement and optimization:
Lead Generation and Email Autoresponders
One of the biggest mistakes in online marketing is not collecting emails or mismanaging an email list. An email list is one of the most powerful ways to cultivate a relationship with readers, drive traffic to your site, and sell your product.
Optimizing your list could be one of the best ways to increase the revenue on your new site. Here are a few examples of techniques that work:
- Creating a better lead magnet. A lead magnet is what you offer your visitors in exchange for their email address. For example on my team building site, I offer a free eBook of games and icebreakers in exchange for them signing up for my email list. This eBook is a great lead magnet because it qualifies potential customers (if they are looking for icebreakers and team games, they are likely to be interested in other team building products) and gives people enough value that they are very willing to give away their email address for it.
- Using an autoresponder. Some sites (especially sites under $10k) don’t use an autoresponder, presumably because it costs money. However, an automatic sequence of emails could be huge for your bottom line.
- A/B Testing subject lines, send times and content for open rate and conversion. There are many variables you could test but these are probably the easiest and have the biggest potential for quick wins. If the previous owner already has an autoresponder, can it be improved? Are there any mails in the sequence with a low open rate or clickthrough rate? These are good places to start.
Pat Flynn wrote a great eBook called Email the Smart Way that talks about keeping your email subscribers engaged.
Despite the fact Google says meta-descriptions are not officially part of the ranking algorithm, they do influence the click through rate (CTR) to your content, which is a factor in search engine rank.
While it might not be an “easy win” to optimize hundreds of meta tags, you could try increasing your CTR for high volume search terms that you already rank for.
Here’s a great article on meta-descriptions from Neil Patel.
After the ‘easy wins’ you’ve got other ways of optimizing sites that are more involved. Depending on how much time and resources you want to invest and the potential returns, you might consider more involved strategies like content marketing, technical SEO and link-building (see below).
Neil Patel’s SEO and Marketing Guides
Neil Patel’s very thorough guides are one of the best places to start. He could definitely charge for this information, but he gives it all away for free (well, in exchange for your email address).
- The Beginner’s Guide to Online Marketing
- The Advanced Guide to Content Marketing
- The Definitive Guide to Growth Hacking
- The Advanced Guide to Link Building
- The Advanced Guide to SEO
- The Definitive Guide to Copywriting
Other helpful resources for optimization:
Matthew Woodward’s blog has great info about SEO and marketing. He has other contributing experts that also write on his site. He also does really great roundup posts where he links to the best articles he’s found that month.
Pat Flynn from Smart Passive Income is one of the nicest and most genuine guys in a space that isn’t known for being particularly nice or genuine. His in-depth posts are excellent and his income reports are inspiring.
How to Secure Your Digital Asset
In an online business, a disproportionate amount of your asset value is contained in your digital files. Protect those files and you are protecting your asset. Here are some ways to avoid website downtime or losing your data:
Separate your hosting, domain registrar, and DNS hosting. There are many reasons why you should do this, and Brendan Tully explains it better than I could in his fantastic talk at the Nomad Summit.
For registering domain names, I recommend NameCheap. Like the same suggests, it’s cheap, secure (they support two-factor authentication), and reliable.
(Side note: when checking availability of domain names, instead of using a service like GoDaddy, use Suso’s Safe Domain Checker to avoid domain name front-running.)
Sign up for CloudFlare for DNS hosting. It’s FREE, it protects your website from brute attacks, email address scraping, and it will speed up page load times.
ShoutMeLoud talks about why you should set up CloudFlare here.
How to Sell Your Website
My current online investment strategy is ‘buy and hold,’ but that may change as I take on more sites and sharpen to focus solely on the ‘winners’.
Here are some basics of selling your site to get maximum return.
First off, some excellent advice on Flippa auctions from the guys at Empire Flippers. Before they created their marketplace they were The Adsense Flippers and sold the Adsense sites they built on Flippa.
And here are a few more articles from around the web with excellent tips and strategies:
- 5 Mistakes to Avoid When You Sell Your Site on Flippa
- Zac Johnson has sold more than $100,000 worth of sites on Flippa. In these two posts he shares his best tips for getting more from your auction:
- How to Create a Killer Auction for Selling Your Website
- Flippa Tips – How to Sell Your Site for the Most Money
- A good article on Sitepoint that talks about the basics of selling a site. Has a good analysis of the common objections that will influence the site selling price.
Transferring the Site
Once you’ve bought a site, the next step is to transfer it into your name/account.
If you’re not very technical (like me), it can be a huge headache to try to do this yourself. You could pay a professional to do it for you in a fraction of the time. I transferred my last few sites myself (whew!), but I’ll probably pay someone to do the next one for me.
Becoming a Digital Nomad
One of the best things about working online is that you have the freedom to move around, travel, and choose to live where you want.
Jodi over at Legal Nomads has written an epic guide to working online and remotely, which should be required reading for anyone who wants to work online or remotely. It also has sections on productivity, project management, and other resources for entrepreneurs. It’s really a gold mine of information.
** Her guide was actually the inspiration for this page – thank you Jodi! **
I’ve personally enjoyed living in Chiang Mai (a digital nomad hotspot) for the last six months, and have just landed in Vietnam to spend the next month near the beach. I’m looking forward to doing more “slow travel” (staying in a place for a few months at a time) in 2016.
A few friends and fellow nomads have blogs that will give you insight into the life of a digital nomad — specifically, life in Chiang Mai, Thailand:
Bauke is a Dutch entrepreneur who ‘hacks the system’ with affiliate products. He’s currently taking a break from work to drive across Vietnam by motorcycle.
Ellen is a self-published author and psychology consultant who has lived in Chiang Mai for the past six years. On her blog she writes about how to stay healthy in body, mind and spirit and has a great mini-guide called The Overachiever’s Survival Guide: How to Take Care Of Yourself While Changing the World.
Jacob is a computer programmer who blogs about travel gear, productivity, and the different ways nomads make money online.
Johnny FD has been featured in Business Insider for growing his business to over $100,000 a year while living in Chiang Mai. His book Life Changes Quick tells his story of going from not being able to afford a plane ticket home, to starting his drop shipping sites and making over $10,000 a month.
Business books provide huge ROI on your money and time. But don’t just take it from me. Here’s Seth Godin:
“A book is a bargain, still. A screaming bargain. You pay $15, $20, and you could have something that might change your life. You have something that reminds you, 20 years later, sitting on the shelf, of where you were when you read it. I LOVE buying books.”
–Seth Godin, on the Tim Ferriss Podcast
There are very few good books about buying and selling websites, (which is why I plan to write one myself!) but the one I do like is How to Invest in Online Real Estate by Chris Guthrie. It’s short, concise and gives you all the concepts and a good knowledge base to work with.
Flippa has a very basic, free guide to buying websites here.
FE International has two very thorough, free guides to buying an internet business:
They are more catered to higher-end purchases, and there are some strategies that won’t make financial sense for smaller sites, but the information is very good. Note that the reading is very technical (and sometimes dry).
Books About Mindset
As Dan from the Tropical MBA put it:
“Getting to six figures is largely about overcoming psychological challenges, getting to seven is largely about strategic challenges.”
These books about mindset can help get you over the initial mental hurdles that often come with entrepreneurial projects.
This is the original mindset book. Napoleon Hill looks at the millionaires of his time (Andrew Carnegie, Henry Ford, Thomas Edison, etc) for commonalities in their way of thinking. And because the publishing rights have long-expired (it was originally published in 1939), you should be able to find in on Kindle for free, or get an updated version for 99 cents. A screaming bargain.
So many books advocate putting 10% of your paycheck into 401Ks and RRSPs, but how many 30 year olds do you know that have gotten rich from maxing out their 401Ks? This book nearly exploded my brain, and it might do the same for you.
Why do we procrastinate on projects that we are passionate about? Why is it so hard to release creative work out into the world? These are problems that most entrepreneurs and creative face, and Steven Pressfield presents a helpful way of thinking about it.
Written by Jason Fried and the guys at 37 Signals. This is one of the most highlighted books on my Kindle for good reason.
The book that launched a thousand digital nomad ships. Although some of the specific technical advice is outdated, the ideas about changing our relationship with work, productivity and lifestyle are still just as important.
Podcasts are one of my favorite ways to learn new business concepts.
When I discovered them a few years ago, I was floored: I could learn about so many different topics and business models (online marketing, SEO, content marketing, website flipping, etc) during my commute or when I was driving — and it’s all FREE.
The newer podcast players even have settings where you can change the playback speed and listen at up to 2 or 2.5 times speed, so you can take in twice the information in the same amount of time (once you get used to 2x speed, it feels weird listening to radio at regular speed).
Here are some of the best podcasts I’ve found that cover website buying and selling:
“Don’t build a startup, buy one!” This show has a narrow focus of only buying and selling websites. If this is your business model, I would recommend listening to every episode. Ace and Joe manage to strike a great balance of entertainment and being informative. The 2nd season (which just started) is all about buying sites and the 3rd season will be about selling sites.
This show has been around for years, and started as the Adsense Flippers podcast, back when Justing and Joe were building Adsense sites to sell as their business model. It’s more broad and covers more topics than the newer Web Equity Show, but there are great takeaways in almost every episode.
Similar to Empire Flippers, Dan and Ian riff about what’s going on in their business, their interests and sometimes invite guests to talk about building their businesses in Asia. Even the episodes that don’t really apply to your business are worth a listen.
Here are a few one-off episodes that cover website flipping:
- Chris Guthrie was one of the guys that inspired me to get into this space. This interview has a lot of knowledge bombs.
- An interview from the same podcast with Justin Cooke from Empire Flippers about the fastest path to side hustle cash flow.
- Freddie Mixel talks about how he optimizes his adsense revenue in the months leading up to the sale.
Including the links and books above, you should be busy reading for a while… What’s that? You want more??
Here are a few other places you can find great content about online investing:
- Flip Filter’s Blog is usually interesting reading about the industry, with good analyisis of the market in general and Flippa’s strengths and weaknesses.
- A great article / infographic about the trends in the industry in 2015, and what they think will be big in 2016. Their site often has good in-depth articles and breakdowns of purchases that are worth reading.
Also, make sure to bookmark my site, Return On Conversion and sign up for my email list (see the sidebar) to get the latest case studies and posts. I want to make Return On Conversion the best resource out there for people who want to get into online investing.
** If there’s any resources you think I’ve missed, or have any questions, send me a mail and I’ll be happy to get back to you: mike (at) returnonconversion (dot) com **
I hope you found this page helpful!