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.
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.