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Website flipping can be a lucrative way to make money online (if done right). I view websites as real estate to an online world. There’s a number of different strategies you can deploy to make money buying and selling websites. I’ll walk you through a complete guide on how to make money with digital real estate.
Art of Website Flipping: How to Make Money with Digital Real Estate
Thanks to innovation with the internet. There are a million ways to make money online. You can do make money no matter the location and no matter your resources. I’m a firm believer of that.
We’ve already given you guides on how to flip a number of different things, such as:
- Best Items to Flip for a Profit
- How to Make Money Flipping Phones
- How to Become a Sneaker Reseller
- How to Flip Event Tickets for Profit Online
However, website flipping is a personal favorite of mine. I think it has the most potential for upside to build massive wealth over time.
I use Personal Capital to monitor my net worth, cash flow and profits from any digital real estate that I own.
Flipping websites might require the most upfront capital. With any website flip or profit from selling a website, I like to invest the proceeds into real assets and stocks that provide additional income such as dividend stocks or real estate.
You can download my guide on how I plan to invest for passive income below.
I’ll show you exactly why and how to make money flipping websites, why websites are viewed as real estate and how to think about returns/valuation.
What is digital real estate?
Digital real estate is internet property such as domain names, starter websites, established websites, blogs and eCommerce stores. These are all pieces of property that make up the internet, which is why they have similar characteristics to real estate.
What is included in your digital real estate?
It’s more than just a website, digital real estate is the following:
- Domain name
- Links to your webpages
- Social media profiles
- Email list
- And so much more
Digital real estate comprises of everything that the internet is made of. Every link that gets placed somewhere provides incremental value to your ‘real estate’ on the internet.
By looking at digital real estate, you are investing in a website for income and/or growth.
Why is it called digital real estate? Aren’t they just websites?
The internet is a web of various pages between websites and domains. There are only so many clicks on the available on the internet by people around the world. The internet is a web of pages all interconnected together through links.
Like real estate, there is only so much land space available on the internet. Think of the “land space” as clicks and the links/domain are the property.
Social media and mobile apps are killing websites?
This is a tough debate. Some people say yes. Others say no. At the end of the day, there will always be some level of risk that some new product or service could overtake the internet. It won’t happen overnight.
The case for mobile apps not killing websites is that they are likely only reinforcing internet usage. Think about what you do on social media, it generally leads you to somewhere off the web. There are often topics, industry reports and content that simply can’t be fit into 140 characters or less.
Or, you can’t explain how to flip websites with just a single image (yeah, I’m talking to you Instagram).
When you start to formulate your plan for making money flipping websites, you should consider that one source or all sources of traffic are at risk at any given time.
Buying a Website vs Building a Website
How do you know if you should buy a website or build a website from scratch? Well, you need to know what your strategy is first. To help you identify the difference between buying a website versus building a website here are a few considerations.
Buying a Website
- You are buying a potentially stable business primed for growth.
- You’ll likely need a decent amount of upfront capital to acquire your digital real estate.
- Buying a website allows you to deploy multiple strategies to achieve success.
- Way less work required for buying a website versus building one (strategy dependent).
Building a Website
- With building a website, you need to focus on keeping costs low.
- Significant time is required to build a successful website from scratch.
- By building a website, you need to acquire pieces of digital real estate… This is only done by taking away pieces from other websites or established forms of digital real estate.
- You aren’t guaranteed success. Some sites built from scratch simply don’t work out.
In order to flip websites, you are likely going to buy an established or starter website, scale it and eventually sell it.
How to Flip Websites for a Profit
First and foremost, you will need a plan and a specialty for flipping websites. There is no one size fits all approach to website flipping.
Think of it like real estate investing or even investing in a business. If you don’t think about it like that, you will lose money.
Mindset over matter.
You need to make changes to the website that you are purchasing.
Steps to Start Flipping Websites
Follow these steps to help you get started with website flipping.
1. Learn a Specialty and Test It
Before you get into the business of flipping websites for a profit, you should understand what you are very good at. It doesn’t need to be multiple things. It only needs to be one specialty. This is important. You will eventually go out and acquire websites that do not have this feature attached to them.
These specialties that will help you grow your website include:
- Ability to grow revenue through partnerships
- Social media expert knowledge
- Lead generation automation and scaling
- Growth hacking
- Search engine optimization (SEO)
You’ll learn a lot, which can be applied to help you become an absolute website flipping genius.
2. Choose Your Strategy
With any form of investing, you should have a formulate strategy upfront that tailors to your risk tolerance. If you can’t tolerate the volatility of high-growth stocks, how would you be able to flip a website that has no earnings at all and is extremely expensive?
There are a number of strategies that you can deploy by investing in digital real estate, which include:
- Income-Only: You buy a very established website solely for passive income. In this strategy, you are looking for businesses that have a strong moat, automation and need little involvement from you. You simply cash the checks. When you sell, you don’t really need it to appreciate in value. You are fine with the same valuation as your purchase.
- Balanced (Income and Growth): Balanced website flipping entails acquiring a website that produces great income, but possesses an opportunity for further income growth with just a few tweaks or updates.
- Growth-Only: Growth-only website flipping solely relies on acquiring websites that do no make money right now, but have massive potential. You are simply banking on the eventual sale of the website.
- Distressed Website Flipping: Distressed website flips include acquiring dormant websites. These websites have either been inactive or somewhat shut down. You can acquire these types of websites on the cheap and fix them up, which can result in massive gains. They just need some renewed love.
No strategy is better than the other. You simply need to get very good at one strategy. This will ensure constant profits and compounding wealth.
3. Choose a Niche and Revenue Model
This is pretty straightforward, but you should identify a handful of niches and revenue models ahead of time. Each one is very different from one another.
Some common niches to buy a website for eventual sale, include:
- Food and cooking
- Travel and leisure
- Personal finance and investing
- Health and medical
Of course, these niches are very broad. There’s plenty of micro-niches within each of these broader topics.
Look for a website that has a stranglehold on one of these niches. Then, find complementary industries that you can expand into.
4. Start Finding Websites to Flip for a Profit
How do you find websites to flip for a profit? You need to start by finding one to buy!
There are only two ways to buy a website: 1) go out and find one on your own or 2) use a marketplace to buy a website.
If you want to go out and find your own website takes a lot of work. That’s a whole different post on its own.
The skinny of finding a website to acquire on your own means that you must be willing to go the extra mile to do outreach, find underloved digital real estate, interact and negotiate with unwilling sellers.
It’s a lot of work. But. You can end up getting better assets for cheaper that way.
The other way would be to use brokers and marketplaces such as Flippa, Empire Flippers or FE International. These sites all have a stronghold on the market of buying and selling websites.
The one thing to consider about these brokers and marketplaces is that they do a great job of marketing your digital real estate.
Therefore, websites marketing on these platforms usually command premium valuations. Depending on the niche, revenue model and history, usual valuations for websites are 2-3x annual profit or 20-30x monthly profit.
Think about what you will need to do to the business upon acquiring it. Annual profit for the website being sold is not always the same as when you own it. Here are several questions that you need to ask yourself:
- Will you need to hire additional writers?
- Do you need to improve the theme or framework?
- How much investment is needed to develop a new revenue stream?
After evaluating these above questions, evaluate what you think about the go-forward earnings of the business.
5. Execute Your Strategy
Okay, you just bought your website. Now is crunch time. How are you going to grow your revenue to make your website more appealing for an eventual sale?
Well, you need to start monetizing new channels. These are the ways that you can make money from your website.
- Advertising: Advertising is solely a revenue per impressions (RPM) or cost per click (CPC) model. You put ads on your site and earn revenue from it. It’s an easy, hands-off way to make money from your website. However, it also requires the most volume to have a meaningful amount of revenue. Most people start with Google AdSense as a starter, but there are plenty of alternatives to AdSense that can help you grow your website.
- Affiliate marketing: Affiliate marketing is in a way, advertising. However, affiliate marketing solely relies on a cost per action (CPA) to generate earnings. You need someone to click through and either sign-up or buy the product. If you are a news website with significant viral content, breaking into affiliate marketing might be pretty tough. Bloggers likely have more success with affiliate marketing due to the trust buildup with their readers.
- Lead generation or customer acquisition: Lead generation is solely a model that you sell your leads to qualified businesses. You will earn a commission for every converted lead. This very different than affiliate marketing in that you usually take a local SEO approach and build a database of leads. Think like local roofing or lawn care maintenance leads. There’s a lot more of this going on than you think. You can use an amazing tool like Leadpages to start capturing leads through easily customized landing pages and lead magnets. If you use my link, you can start a completely free 14-day trial.
- Customer mining: With customer mining, you basically use your existing customers, readers, etc to establish new partnerships and joint ventures. With any new conversion that happens from your customers, you earn a commission. A classic example of this is when bloggers team up with other bloggers on sharing a course. Here’s how to create a course to sell for profit.
- Advertorials (aka sponsored posts): Informative posts or publications that can be worked into articles to give companies positive press. Most bloggers know these as ‘sponsored posts’ or some sort. These can be much more sneaky than what you see in the blogging circles. Much larger news outlets and content sites do expansive campaigns to help position companies in a positive light.
- Product or service sales: This way to make money online through your website is easy. You sell a hard good or service in exchange for money. Your site is either an eCommerce store, a SaaS (Software as a Service) or a freemium product. This is a lot different than the other advertising-based revenue models. With the recent boom of Amazon and other sources, making money from drop shipping has become extremely competitive.
When finding a website to buy for eventual sale for profit, you want to think about the additional monetization methods that are not already present.
For example, you are about to acquire a website that solely relies on display advertising for revenue. Why not bolt-on affiliate marketing and/or lead generation through SEO?
When you execute your strategy upfront and start buying websites for profit, ensure that you do your due diligence on the website.
You need to validate every single component of the income statement, assets, social media profiles and anything that is classified as “digital real estate.”
After you have acquired your new website to grow and flip for a profit, it’s all about the execution on the revenue side.
People need to stop caring so much about traffic. That only goes so far because display advertising revenue is simply not the most scalable revenue solution.
Yes, traffic can help you generate more leads and potentially lead to profit.
Find a high-quality revenue solution for your new piece of digital real estate.
See Related: Legitimate Online Jobs You Can Do Anywhere
Typical Return on Investment (ROI) for Websites
The best news about all this is that the returns for buying and selling websites are fantastic. You can crush anything that you can earn from investing in the stock market.
Some considerations with your return on investment:
- You likely won’t be able to use leverage when buying your website.
- Selling your website takes more time and is less liquid than other asset classes.
- There is no defined time for ownership before you’d like to sell your website for profit.
With a successful website flip for profit, you can earn 10x your money and even earn 100+% returns (depending on your strategy).
Even that, buying large websites with established customers and strong competitive advantages, can yield returns in the 10-20% internal rate of return (IRR). You can achieve these type of returns even with only modest improvements to the site.
Pros and Cons of Flipping Websites for Income
These are some of the advantages and disadvantages of buying and selling websites.
Pros of Website Flipping
- Massive upside potential that could earn you serious wealth.
- The flexibility of strategy depending on your risk tolerance.
- Ability to learn and live completely independent of a full-time job.
- Has the potential to unlock pure financial freedom and personal independence.
- Your fate is (somewhat) in your control. Make the right decisions and have your strategy down pat, it will likely work out.
Cons of Website Flipping
- Significant time investment.
- Fastly evolving digital world. You’ll need to be nimble to achieve consistent success.
- No guarantees of success.
- You won’t win with every website flip. Think about it like a portfolio. You’ll have some huge winners and some losers. The point is to win much more than you lose.
Conclusion on How to Flip Websites
The sky is the limit with website flipping. There’s a significant runway for you to build an outstanding website from something that already has some form of digital real estate attached to it.
What are you doing? Start making money with your piece of digital real estate before it’s too late. If you do it right, you could end up living as a digital nomad traveling the world and making money while you sleep.
You don’t need to be a coder, programmer or a tech genius. You just need to be savvy and work hard.
Was our guide to flipping websites helpful? Let us know in the comments below. We’d love to hear from you.
Related Guides to Flipping Products or Assets
- How to Flip Event Tickets for Profit Online
- How to Make Money Flipping Phones for Profit
- Best Tangible Products to Flip for a Profit
- Learn How to Sell on eBay Full-Time
- Become a Sneaker Reseller for Profit
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