Buying Site - Increasing Revenue - Flip for Profit

[TeddyP]

We've got some threads about selling your sites, but have you guys ever bought a site that you thought had more potential, made it earn even more money, then flipped it for an exponentially large multiple?

I'm going to think outloud here...

Say a site is making $100 a month and is for sale. You do due diligence, things look good, you buy it at 20x multiple. It's a lower multiple due to the low revenue, that's what I've seen.

So you just spent $2000 to buy it and you hold it for one year. So let's assume you manage to slowly ramp up the earnings to $300 a month over a year. So you'd average $200 a month for 12 months and bring home $2400.

So you spent $2000 and brought in $2400 from revenue. Now you're at $400 profit.

But in that year's time, let's say it costed you (not counting your time) $3000 in links, development, design, infographic, whatever. So you're really at -$2400 in money.

BUT! You relist it now at the new monthly income of $300 a month. It's a little tastier, so instead of getting a 20x multiple you get a 25x multiple. So that's $7500. Someone buy's in on a BIN and you accept and get rid of it.

After a year of messing with this site, that leaves you at a grand total of $5100.

Let's say you do this 5x in one year, same numbers, but two of them completely flop. So you'd make $15,300 on sales but spend -$4800 on flops. You still clear $10,500. Not bad, even at a 60% success rate. I calc that at 75% ROI. That's not bad, I guess.

Do any of you guys mess with this business model?

 

[BIGdCPA]

Best time to do this is when there's a new algo update and people think their sites are worthless. If you know how to recover a site, or at least have a decent eye to tell when a site isn't FUBAR.. you can pick up some absolute BARGAINS from people trying to unload before their 3 month trailing earnings start to sink to nothing. It's a dangerous game, you're going to get some duds for sure, but you can also get amazing sites for next to nothing. Especially sites that were listed BEFORE the algo hits them.

Some people even do this with sites that have gotten manual penalties, like scoring premium domains then getting the penalties lifted. That's a bit too risky for my taste.

 

[MetaData]

It's a very interesting strategy, it makes me think of mechanics who also buy and fix up cars. I think it's especially badass if someone is really big in a particular niche and can leverage their existing assets to bring even more value into the flip before they unload it.

 

[Samwise89]

MetaData, I can imagine guys with insanely huge PBN's who can take a site and push it much further very quickly with assets they already have, like you said. I guess the main challenge is having the income up front to buy and then pay for making it better. Getting to that point would be my current problem.

 

[MetaData]

MetaData, I can imagine guys with insanely huge PBN's who can take a site and push it much further very quickly with assets they already have, like you said. I guess the main challenge is having the income up front to buy and then pay for making it better. Getting to that point would be my current problem.

From your posts, it seems like you're in an awesome position that a lot of us would have killed for... Starting to make sites in highschool, and being on the right path right out of t he gates? That's awesome, man. You might not have the capital to do everything you want right now, but you're in the perfect position to build your own assets while all your friends are out wasting their money on Pokemon cards (lol).