My favorite form of real estate is online websites. There is a large opportunity to make millions of dollars on the web with a lot less capital requirements compared to other forms of investment.
One of the ways I’ve grown my wealth over the years is to invest in online real estate. Sure, I have my main companies like KISSmetrics and Crazy Egg, but I also own a ton of small sites such as Gym Junkies that most people don’t know about.
Here’s the process I use to make money from acquiring and selling sites:
Rule #1: Always buy distressed assets
The most important thing to remember when buying sites is that you always make money on the buy, never the sell. It’s rare that someone will pay a large multiple on revenue or profit, so don’t expect to get rich when selling a site.
But where you do make money is buying sites for less than they are worth. In many cases people are willing to sell sites for 1x yearly revenue or even 1x yearly profit. Sometimes people want out of a business for reasons such as death, divorce, or any other financial obligations that they have to meet.
Usually people who are willing to sell their sites for a low amount have these common qualities:
- They don’t update their site too often
- They don’t make too much money from it
- They don’t care about the business
If you can spot those 3 qualities, you can typically come up ahead on the buy side. If you are wondering how to find these sites, just reach out to website brokers and tell them your requirements. I myself use Flipping Enterprises.
And if you happen to buy a website, don’t buy the company, just buy the assets. If you buy the corporation, you will then take on any liabilities that may have had, such as a lawsuit.
Rule #2: It’s harder to build something than to grow it
The hardest part about running an online business is starting up a website and getting traction. Sure, getting to 10,000 visitors a month may not be hard, but getting to over 100,000 visitors a month is hard.
But the interesting thing is, once you hit 100,000 monthly visitors it is much easier to grow to 200,000 or even 300,000 visitors a month.
For this reason I won’t buy a site that doesn’t have at least 100,000 monthly visitors and ideally is in a lucrative market. It’s hard to grow traffic in a really small niche, so I focus my time and energy on lucrative niches such as finance, health, IT, and anything that may have a high Google cost per click.
Rule #3: Don’t rely on Google
I love Google and it actually drives a lot of traffic, but you never want all of your eggs in one basket.
Before I buy any site, I make sure I can grow the audience through Facebook. It’s one of the most popular channels in the world and you can drive a ton of traffic to your site by building up a fan page. Here’s my process on Facebook:
- Create a test advertising campaign – before you even buy a site, you can create a test advertising campaign on Facebook, in which you don’t fully finish the ad. But by entering in target keywords and demographic data, you can find out how many people you can potentially target. I never go after an audience that doesn’t have at least 5 million targeted members.
- Build out your campaign – assuming you buy the site, you want to build out your ad campaign. I usually set $10,000 aside. I don’t target general categories that Facebook provides, but instead I focus my money on specific keywords that are highly related to my site. I also focus on my ideal customer, such as with Gym Junkies I know that males are more likely to be into weight lifting than females. I also make sure that I am only buying traffic from people who live in the US or any other market that I know that would potentially buy products I would sell.
- Let Facebook optimize – when sending traffic to a fan page, there is a setting in which you can let Facebook optimize your bidding for you. It optimizes for engagement and page likes versus a CPC or CPM model.
- Create good content – I add a ton of images, quotes, and video content to my Facebook fan page to boost engagement. If you want to copy my content strategy just follow the steps in this article. If you don’t think they work, just check out the Gym Junkies fan page.
- Use Facebook insights – after 2 weeks of buying fans you should be able to see the age, region and gender of the fans that are liking most of your pictures. I used to bid on Canada traffic for Gym Junkies and although they were the majority of my fan base at one point, I learned that they weren’t liking and commenting on photos as much as males who were over 18 that lived in the US. So I adjusted my overall ad spend to maximize my likes, shares, and comments.
If you can successfully build up a Facebook fan page you will be able to drive more traffic to your website. Every time when we post a link to Gym Junkies from Facebook we can easily drive 2000 plus visitors back to our site.
Rule #4: Collect emails
The way I grow any site’s traffic… no matter what industry it is in, is through emails. From offering free ebooks to discount coupons, you can collect emails from your site. This way, anytime you have an offer you can do a blast to your email list.
Here are the 3 most common methods I use to collect emails:
- Facebook – you can create a page on your Facebook fan page that allows you to collect emails. You can find step-by-step instructions on how to do this here. To boost the opt-in conversion rate, offer a free ebook, course or even a coupon.
- Blog – hopefully the site you are acquiring has a blog. If it doesn’t, you should create one. When creating a blog you can use pop-ups, sidebar opt-ins and opt-ins below each blog post to collect emails. Again, offering something for free such as a 30-day course or an ebook works great to collect emails.
- Contests – although you can’t run contests all of the time, you can leverage them to collect a few thousand emails in a short period of time. I usually use Contest Domination to run my contests as they have features that will help make your contest go viral incase you don’t have a big user base.
After you start building up your email list promote whatever products or services you maybe selling. Or if you don’t have any, you can create an email drip sequence and promote affiliate offers.
Rule #5: Write great content
My favorite way to grow a website is through content marketing. By creating great content and pushing it out via the social web, you can gain new readers, build links and increase your overall Google traffic. And the best part about it is you are doing this by adding a ton of value to potential customers by educating them with free advice.
If you want to create a content marketing strategy, it’s important to note that you need to write really good content. Don’t regurgitate the same old information and don’t waste your time covering the news. Also don’t write short blog posts as ones over 2000 words tend to get a lot more traffic and rank higher.
When writing content, follow my strategy that I use for Quick Sprout. You can find the steps here.
Rule #6: Optimize for conversions
There are 2 ways you can make more money from any website. The first is to drive more targeted traffic to the website, and the second is to optimize the site for conversions. The first option is the more expensive one and it should be leveraged once you have a high conversion rate.
I’ve written a decent number of posts on conversion optimization in the past, but incase you missed them here are a few posts that should help you boost your conversion rates:
- 11 ways to improve your call to actions
- What spending $252,000 on conversion rate optimization taught me
- How to optimize responsive designs for conversions
- How to optimize contact forms for conversions
- 11 a/b tests you ought to try
Once you optimize for conversions you should follow this guide to boost your overall search engine traffic.
Rule #7: Focus, focus, focus
One of the biggest reasons most people lose money when they buy a site is that they don’t focus on them. You can’t expect to spend a bit of money and make a huge ROI without putting in much effort.
You have to put in the time and effort if you want something to pay off. If you don’t have the time like me, you can hire someone to deal with it on a day-to-day basis, so you don’t have to think about it. Or what I do is offer people 50% of all profits to run the business and I just have to provide the capital.
Whether it’s you or someone who is qualified, if someone isn’t working on the new website you just bought, it won’t get the attention it needs to grow. This is important because no acquisition is as easy at seems… you are going to run into roadblocks.
Rule #8: Don’t get too greedy
There is always a right time to sell your business. So when is the right time? Well it depends on what’s enough for you.
I myself don’t like selling properties, but once my growth rate slows down to 30% a year, I look to sell off the site and move onto something new. Just make sure your growth rate doesn’t die down to 10% per year because the multiple you will receive on your yearly profit or revenue will drastically decrease.
If you are wondering how to sell your business, you can use the same broker you used to buy the business. They typically have a ton of contacts in the website buying world.
Conclusion
My guide to buying and selling sites isn’t fool proof, but it’s worked well over the years. Just don’t expect to get rich off of the process above because it takes years before you’ll see a great return on your investment.
It’s very rare to acquire a site and sell it in a few months for a huge ROI.
So what other things should you should consider when buying or selling sites.
This amazing course will teach you, step by step, how to double if not triple your traffic over the next 30 days.
Hey Neil,
Funny – as a real estate investor and blogger, I always think about the amazing similarities between real estate and websites. Just like there are “house flippers” there are website flippers, and just like there are those in the long haul of real estate, there are those in for the long haul of using websites. I could go on forever, but it’s just cool to read this post and see them all!
The biggest difference, of course, is generally the money needed to get started. Real estate usually takes a bit more but might last longer in the end. Websites usually have a lower entry-barrier.
I’m a big fan of both, which is why I invest in both!
To answer your question – I’d add one more thing. Just like real estate – those who invest in “online real estate” need to run their business like a business – not just a hobby – to be successful. I think that’s one of those things that truly make a website stand out. I think you’ve done an awesome job with Kissmetrics and Quicksprout in doing exactly this.
Keep it up, Neil!
Brandon, that’s awesome. Also, the parallels between the two markets are great.
Great tips these Neil! One tip would be to buy a site with a premium domain name & a .com extension, and the one which big players would be looking to acquire anytime.
Thanks for the extra tips!
What about emerging mobile apps, which tend to not have revenue defined or enabled until traction is gained? Flipping Enterprises won’t consider this niche (we just tried).
We are thinking of selling a newly released iOS called ShoutOut Radio – http://www.appstore.com/shoutoutradio
Anyone interested?
Rick, thanks for reading
Hey Rick,
Apps can be a pain to sell, especially iOS apps — the seller needs to either transfer the entire iOS developer account to the new owner, or sends through just the files, and the app then needs to be re-approved by Apple and loses all previous reviews and users.
Until there’s a more elegant solution to selling apps, it’s not likely that we’ll see a huge market for iOS apps, unfortunately…
Hi Neil,
I like this idea a lot as it appeals to something in me that loves finding a deal (I used to buy and sell baseball cards as a kid).
Question: To use the real estate metaphor, how much renovation do you end up doing to a typical site, and is that part of what catches your eye, the ability to turn a 1990′s style site into something more appealing?
…Tim (advisor to Spring Metrics)
Awesome, I definitely feel the same way when it comes to buying sites.
Nice post. I didn’t know you used to buy/sell websites. I’m never bought because I would only stick to flippa for the marketplace but there’s too many scammers selling. As far as buying, it’s super important to keep track of everything from earnings to analytics.
Where do you think is a good market to buy/sell? I personally think private deals through your network is the best.
-Amir
Yeah, private deals definitely have their perks!
Awesome post, very informative and something I’ve been looking into a lot more lately. I’m curious though, what sort of time investment do you make personally before having someone else take the reins and how do you find/choose a person you can trust to do that?
It really depends on the time of site and the time commitments..
strange..just listed my blog to sell on Flippa and this articled showed up in my inbox
Great timing
HI Neil,
Informative post!
I think at times we get obsessed with our blog/website and didn’t want to part away with that. Even though I’ve not reached that level where I can think of selling my blog but yes your rule of 30% is worth making a note of.
Thanks Neil for this share.
Sapna
Sapna, definitely. Thanks for reading..
Thanks Niel. This post was very relevant and timely as I just listed my website http://www.TryAyurveda.com for sale on GoDaddy.
Awesome, thanks for reading
My biggest problem is I buy faster than I can develop them, and only 10% of my portfolio is developed. Getting traction in site development is an on-going endeavor.
Why not focus on building systems to scale the business? I think a lot of what Neil explained in this post can be out/in sourced.
If you refine that process you could start developing the sites you purchase, at least higher than 10%!
Derek, those are some great points…
Yeah, it’s tough but once you have a process going it gets easier..
Outsourcing is a great solution for this. Remember that as soon as a site is inactive for a few days/weeks, its perceived quality goes down, and it stops being competitive in search results. Even updating sites once a week or so with unique content goes a long way to keeping them fresh (and maintaining their value if you’re interested in selling again).
Great points!
Crazy! I just contacted the designer who designed your GymJunkies website. I’ve always loved the design of all your properties… makes sense why I liked this one.
You should make an article on sourcing designers, and getting quality work from them, because you do it amazingly!
Thanks! I will look into writing a blog post about that..
Awesome article Neil
and sometimes i feel its really easy to build something to grow it. Best example is panda and penguin updates. They ruined some sites so badly that we cannot work on them to grow them again 
Definitely. You are right on point.
I don’t know if that’s true, Satish — Penguin and Panda hit hard, but we’ve seen sites recover from it. It becomes a question of whether the time investment is worth the money, though…
Thanks Neil for the tips! Learned a couple of traffic generating ideas from this post. Mostly the references taught me a lot.
I’m not much into this buying site deal but I liked the idea of creating a test advertising campaign on Facebook to figure out how many people I can potentially target. If someday I dig deeper into this online real estate I’ll surly use this one
Sourav, awesome. THanks for reading
I never though of websites as properties – it is really interesting point of view.
Best regards!
Thanks for reading!
Hey Neil,
I’ve always been interested in learning how to buy and sell websites.
It is so much better to take a site that already has an audience and make it profitable vs just building your own website from scratch
Hey Neil Patel,
The Post title is so interesting…No can pass on without clicking and reading…
Its a good advice about buying sites that are underperforming and then taking them way up ahead.
TNX
Glad I could help
Hey Neil,
Awesome post! I have been a regular reader for a while now, but I think this is the first or second time I am commenting. I actually have a folder in my email account labeled “Neil Patel” where I keep my favorite posts!
I just recently sold a website on flippa – and doing it, I realized how lucrative this may be as a part-time business!
I found your point on making money when buying instead of selling really intriguing – and I feel that’s the biggest advantage you can look for when buying a site.
PS – love Gym Junkies, too – I happen to be one myself!
Awesome, sounds like you are doing all the right things. Thanks for reading
What is the amount of money that one can expect to sell a profitable website for (I mean how many multiples of revenue)?
Usually 4 times profit on the high end and 1 times profit on the low end. So some where in between.
Thank you, Neil!
Great article, Neil. It gave me another perspective on what the reality of the the Web market is. But, from what I understand, in order to achieve good results, a start budget is required and a lot of beginners may not have the necessary financial resources. For example, $10,000 for the ad campaign is a lot in my opinion. What would be your advice in this case?
You should definitely start small, and scale from there. Just like any other business endeavor:)
Neil. Do you have preference in the domain name (.com,.net) when buying?
Edgar,
Being an active domainer, I can tell you that .com is invaluable compared to any other TLD and has numerous benefits (including for SEO purposes).
You can probably get away with a ccTLD (Country based), but at the end of the day, .com is king.
I have some high quality domains, so nice timing! Exactly the article I was looking for. As always, thanks for the great post, Neil!
Best,
John
John, Thanks for these points & reading.
.com is usually the type I pick..
Great article! I work at Flippa.com, so I see hundreds of website sales every week and it’s always a thrill. My favourite thing is introducing people to the concept of websites as something that can be bought and sold, not just something that brings in monthly revenue.
If anyone’s looking for more information on buying/selling sites, have a look at blog.flippa.com — I keep it updated with news and how-tos on building your site when you’re specifically looking to sell it.
Ophelle, thanks for these additional points and for reading
I totally agree about growing a site rather than starting from scratch. Its not just the work involved but the huge amount of time it can take as well. I like that you don’t focus on niches but go for the expensive keywords/domains.
Thanks for the quality post,
Terence, thanks for reading ..
What a great information I am getting from your blog. Though I get a lot of emails daily but I never forget to search Neil Patel in my email box. Though this business model is good but I think it requires a big investment. It would be good if you can also share the information regarding how much investment for a website? I would wait for your next blog article. Thanks a lot to teach us to grow in online world.
Thanks for continuing to read. It means a lot
basically i am interested on flipping . can any one suggest what is the best areas to get maximum revenue on websites business
You should check out some of the points I highlighted in the article..
Hi Neil,
Thanks for the articles. I am just a yet-to-start in this web industry. Your articles gives lots of insight.
Regards,
Deepak
Deepak, glad I could help
Great post as always. #1, #3 and #8 are great points and point #5 write great content is so true. Content is the king.
Glad you enjoyed it
That’s interesting to hear about your site buying process!
I’ve been buying sites on Flippa for a couple years. There are some good web properties to be found (along with a lot of junk) if you’re willing to look hard and be patient.
I also just recently bought a site from Flipping Enterprises and can vouch that they are excellent to work with.
Chuck, definitely. I have heard they are great..
Drawing an analogy from real estate to buying and selling web * Properties *, which make up one’s “portfolio”, is a relevant comparison for sure.
Definitely!
It really only takes the time to write rich informative content to really have a website take off. If you write the bare minimum and expect results, you are going to be disappointed. Write like you talk, explain things in detail so that the only thing left to do is pick up the phone or email you when a visitor is done reading your site.
Chris, thanks for the additional info.. Great points.
Wow Neil, amazing post, and not only for buying/selling websites.
I was actually thinking on selling one of my sites and you just showed me what I should do instead.
Thanks very much.
Glad I could help
Thanks for these tips Neil, but do you have additional tips on selling websites? Is selling a website a good business model? Or is it better to buy websites that meets the criteria you’ve mentioned above rather than create multiple sites and sell it in the long terms. Thanks!
I think it can definitely be a good business model. I’ll try to do another blog post on this..
Thanks a lot, Neil! I had about 20 tabs open after this post to investigate some more. My only concern is that some people may be tempted to buy into a business that they’re not passionate about. It would be awfully tough to work on a website you don’t care about for a few years, but that’s their problem. Thanks for the post!
That is a definite concern, but there is definitely a benefit for you..
Great tips and advice Neil. Lot’s of ideas to explore
Chris, glad you found the posts helpful
Is it good to buy old domains neil ? yes facebook and twitter is best source drive traffic for your website but if you have maximum followers and fans on your pages.
Great points.
I really like your posts together, have a lot to learn more from your blog.
Thanks for his information.
Glad I could help. Thanks for reading
Yes Neil, as I am thinking as the same to get domain and made it sell for profit, but actually I am not getting Idea how to do it, lets I will try on some domain when I ll acquire it. Hope! Till this I am going to use it my blogs.
Best of luck!
Why not go after $1 mil+ sites that have management in place instead of smaller sites?
A solid business that is bringing in $300k in cash flow will probably well for around $1 mil. All you need to do is work some solid marketing and conversion rate optimization to double the cash flow.
I am headed in this direction. I am already making huge impacts on conversion rates for companies as a consultant. I can buy businesses, do exactly what I am doing now and get the full reward of my knowledge and work. It just makes sense to go in this direction.
Why have you not gone bigger into the acquisition market?
It’s all about scaling. You bring up some great points. Thanks for reading!
Great Post, Neil.
Indeed Buying and Selling websites is a huge business.
One can understand the potential of it by just taking a look at Flippa.com
Yes, that is a great site that allows people to flip sites..
Hey Neil
I have been doing this very thing for a few years now. While I probably haven’t had the amount of success that you’ve had. It has helped raise capital for other business that have had huge returns. I have defiantly learned some new tricks.
thanks
Ryan, that is great to hear. Thanks for reading
Hi Neil,
Thanks for a great post, it makes for a very interesting read.
I have a query regarding #1 Buying Distressed Assets. I have done something similar in real estate with success, because you can compare other properties sold in the same area with a similar outlook, square metres etc to see the reduced purchase value and the potential increase.
However, with an online business, my question is how can you tell that these online businesses have potential? If the business is in a distressed state, could one of the factors also be be that it is not a viable business?
PS: Looking forward to reading the case studies on Tech Crunch and the cheeky Cheezburger guy.
Nikita, great question. You honestly just have to work on intuition after all factual elements are figured out..
Hi Neil,
Thanks for your response, another quick couple of questions. How did you gain the confidence to trust your intuition? Based on your experience, did you start with a small venture, test, see that the results worked and then naturally move on to bigger ventures. Or did you simply see an opportunity that you felt was right and worth going for?
Looking forward to hearing about your experience.
I just trust my gut and do the appropriate research
Hey Neil som compelling tips and oh so true about building up a subcriber database not only for selling stuff too but also to drive traffic to your site for extra ad revenue.
My passion is property websites and helping people save money buying selling online its a passion but when do I get out! and at what price. I can see me being one of those guys that over price as you have put so much of your life into the website a simple profit calculation does not seem to give it justice
Nick, you just have to find that right balance.. Thanks for reading
Very timely article. Thanks.
To Neil and all his readers, besides Flippa, are there any other good marketplaces to sell and buy websites?
Adnrei, thanks. Readers please provide some tips for Andrei
Hi Neil, any advice on how and where to get someone willing to run the business and take 50% of profits as you said?
I’m thinking of doing that, is there any legal tips to be careful about? Do you make them sign a contract?
Manu, shoot me an email so we can discuss.
Really very well explained through this blog. The work done by you Neil is really commendable. The short advertisement in this blog tells about your achievements in less period of time. And even the information on the topic Guide to buying and selling sites is also very knowledgeable.
Glad you found it helpful. Thanks for reading
It was a great article. It really thought me some basics of online business. Some tips that I should follow before buying a site.
Glad you found it helpful..
Thanks for the great article. I have just started on the online business market and sometimes feel overwhelmed by the amount of information out there to help you build up your business. You have put everything in very simple ways that i can easily understand and follow. Thanks again.
Pio, glad I could help. Thanks for reading and keep continuing on the same path and you will see great success.
I am crazy about blog writing and started my new posting of my own blogs . However I viewed few website how do they run blogging sites . After seeing this website, I am just flawless its quite easy for my own blog posting.
Thanks,
Giri
Giri, that is awesome. Some people can definitely blog on their own and produce amazing content..
Very nice post of the day. I hope every one should get the maximum
benefit from this.
Jura, thanks for reading