Websites are an increasingly popular investment option and offer many great opportunities to smart buyers.
The idea of being able to set one’s own schedule while getting a monthly income that is equal to or greater than your normal job is a dream for many.
The road to full-time revenue to replace a full-time job often starts with investing in an online website, but it’s not easy.
Investing in websites well means learning proper due diligence, acquiring knowledge of how each online business model works, and creating a good system to help increase your chances of success.
Why Should You Invest In Websites?
It’s hard to believe there was a time when people genuinely debated whether or not the Internet would transform a business or be some irrelevant sideshow.
We live in an online world and investing in a profitable website is a great way to get into the game of creating a profitable business or flip while enjoying an immediate monthly income.
Websites can earn you money while you’re sick, sleeping, on vacation, or too busy with other things to work on it.
The monthly payouts of most ad and affiliate programs are monthly, creating a steady passive income that can be reinvested into the site and eventually replace the income from a full-time job.
Investing in one of multiple websites gives you control over an online asset that you can build to earn you even more revenue and a safety net in case of losing pay from business or job loss.
Pros & Cons Of Website Investing
While I’m a big fan of website investing and know how life-changing it can be, there are both pros and cons to investing in websites.
The benefits of investing in a website are multiple. First is the immediate monthly income from a purchased website. This can become additional income or be used to self-fund the website’s own growth.
Building up a successful website is also easier than starting from scratch. If proper due diligence was used and you found a site with high potential and easy wins, building up in that niche quickly can lead to huge pay-offs while a new site would have to wait months or even years to get a fair shake from search engines.
On the negative side, a brand new website can start up with less than $50. Getting a good website will likely take tens of thousands of dollars. That can be an expensive early investment.
You also don’t have control over how good the original content is, how the site is set up, or what topics the site focuses on. If there are obvious holes in quality, this could make the site susceptible to a Google update before you fully enact changes.
The pros generally far outweigh the cons but it’s important to understand both.
- Website is making money from day one
- Long-term passive income opportunities
- You can build on an already successful site, making it easier to scale up income
- Existing knowledge of what articles/keywords are doing well and clone those types of article topics
- If the site has easy wins you can drastically increase the traffic/income and then flip for a big pay-off a year or two down the road
- Very expensive starting out, especially compared to building from scratch
- No control over original keyword topics, content quality, and site setup
- Content-based sites can lose everything overnight with a major Google Algorithm changes (although website due diligence can mitigate the damage)
How To Start Investing In Websites
Investing in websites can be a life-changing step, but it’s crucial to do the proper homework to learn about the process and prepare yourself to find the best deals possible.
There are no gatekeepers. When you’re ready to invest, you can dive right in.
Determine The Type Of Sites You Want To Invest In
There are many different types of websites, and the amount of work/maintenance can vary greatly from one type to another.
Some of the major types of website models include:
- SaaS (apps)
- Digital Products or Courses
Many investors looking for passive income or a simpler “entry-level” website for making money online go with content sites to learn the ropes before moving on to more complex models.
Understand The Process
Investing in websites is a process. Understanding due diligence, valuation, negotiation, and escrow are important to make sure a deal goes smoothly.
Find A Website Asset To Invest In
For beginners the search can be frustrating as it often takes a long time to find a potentially good buy, only to have your first due diligence throw up several red flags. Don’t let this process be discouraging.
There is far more trash than treasure, but being able to pick out website options with potential will get faster with experience.
When you know what type of website you want, focus on those sites and don’t get tempted to look at others. Stay on point and go through the major marketplaces, brokerages, and auctions online to look for potential options.
Do Thorough Due Diligence
Due diligence is always the most crucial part of any deal. Look at the analytics, require current video evidence of the affiliate numbers to show they’re legit, comb the backlink profile for any sign of PBNs or spam links, look at traffic sources, etc.
Due diligence should always be thorough and never pull the trigger on a deal if serious red flags remain.
Purchase & Grow The Asset
Even if investing for passive income, the buyer should always look at investing more time and money into growing the asset. A site that goes from $1,000 a month to $2,000 a month not only pays out all that extra passive income, but it’s worth twice as much if you choose to sell or flip the site.
With a 35x or 40x multiple, that’s a good chunk of money. Purchasing the website shouldn’t be the last step of the process – it’s always smart to invest at least enough to take advantage of easy wins and grow the website to the next level.
How To Profit From Your Website Investments?
There are two main ways to profit from a website investment. Many investors will even start with one and move to another.
- Month-to-month payments
- Flipping the site for a major profit
Operate & Make Money Month-to-Month
Since the site will be paying out on a monthly basis, this is an easy way to build passive income. If you don’t improve it all as an investor it will likely take 3-4 years to recoup the initial investment.
This is why growing the asset is so important, because doubling or tripling the monthly revenue not only increases payouts but also allows you to recoup your investment much more quickly.
Flip The Site
Since valuation is often based on a multiple times average monthly earnings, even a moderate increase in monthly payout can lead to a major increase in value when flipping.
With this method you buy a site, drastically increase the monthly earnings, and after a year or two sell for a major profit. Flipping also often gives enough to make a major profit and have funds to invest in the next website.
Website Investing vs Stocks & Real Estate
All three can be good investments, but each also has their pros and cons. The stock market is volatile and requires decades-long patience to get returns you hope are huge. That’s before realizing how much money is lost by just missing a few top trading days in those decades.
Real estate is often a solid long-term investment but requires an enormous amount of money up front. If the house is yours, you need to hope you’re not in a depreciating neighborhood. If it’s a rental there are damages, management, and other issues.
Websites don’t cost nearly as much as stocks or real estate, and can realistically give returns in the hundreds of percent in 1-3 years. Nothing else is going to reliably match that.
While none of these give the investor total control, an investor has far more direct control over their success with website investing than with stocks or real estate, and I like when my success is mainly in my own hands.
Building Vs Buying Websites
Building websites is much cheaper than buying, and has major benefits. If you’ve never built a profitable website before, I highly recommend doing that to learn how the process works.
The downside is that everything is built from scratch which adds at least 18 months to the process for most people, if not more, and there are always dangers of choosing a bad niche or not breaking out the way the numbers predicted.
Buying a website might be more expensive, but it does allow you to start with a proven concept and successful earning site. The concept is proven so it’s much easier to reinvest and expand.
Frequently Asked Questions
Can you do website investing for passive income?
Yes, many investors focus on investing in websites for passive income. I like to focus on buying, improving, and flipping websites, but there’s no reason the same process couldn’t be used to drastically increase the monthly income and then just keep it on maintenance mode.
Should you buy starter websites with little to no income?
Generally, I don’t recommend this unless you are very experienced and see something in the analytics/niche analysis that really jumps out at you. There’s no guarantee a starter website will take off or that you’ll be able to get your investment back.
How much money do you need to start investing in websites?
Most content based websites sell at several dozen times monthly earnings, so low to mid five-figures is usually the minimum needed to start.
It is possible to find decent deals for cheaper, but a lot more work will be required to scale them up and at that price point it’s arguably not worth it compared to saving up for a slightly better but more expensive deal.
Is buying a website a good investment?
Website investments can be a good or bad investment depending on the site itself. If proper due diligence is applied, then websites can be among the best investments available.
There are few other investment options where you have control over the success/failure and can get passive income and/or a big pay-off that is sometimes many times what you paid for it.