Buying website as an investment

[Arif]

I'm always looking for non-traditional investments. One "investment" that looks interesting is buying websites that produce monthly income from advertising. Anyone have experience buying websites/forums? I'm primarily interested in the consistency of the monthly income from advertisers and typical expenses.

 

[REWahoo]

Sounds like you need to talk to Andy R. He owns this forum and several others. Social Knowledge - Online Community Network

 

[Vinnyfrombrooklyn]

I wouldnt buy one I would make it yourself. I have over 30 now and about 500k pages online. Never in a million years would I buy a website. It is the unique ability of the website that makes the money.

 

[bizlady]

I have two websites where I sell niche products, and do this as my "part time" job until hubby retires. We were going to retire to part time jobs at 50. I had started this at 47 to get my part time job going, then I got downsized at 48. Made it my full time job then after we decided I did not need to go back full time. We now will both work until 55 and are done.

If you are looking at getting sites that specialize in advertising, you are looking at either a PPC or affiliate focused site. These can be difficult to build and get traffic by yourself.

One thing to watch and consider with these is the national sales tax issue. Affiliates across the country are getting dumped by companies like Amazon because many states have taken the position that having an affiliate constitutes nexus. No advertiser, no income.

There are businesses that specialize in brokering websites. I would suggest you vet a couple of those, learn about the business and the opportunites, and then make your decision.

 

[Nords]

Anyone have experience buying websites/forums? I'm primarily interested in the consistency of the monthly income from advertisers and typical expenses.

Our local discussion board (HawaiiThreads) is owned by a Web2.0 entrepreneur who's always trying out new websites and new software for new concepts. He's a business-oriented guy as well as a bleeding-edge trailblazer, so he knows what he's doing and how to make a buck.

The bane of his existence is traffic and reliability. Every time he succeeds with a concept (and it happens often enough to be a problem) then the crush of clicks takes down his website server or his database server or the bandwidth capacity of his ISP. HawaiiThreads is just a hobby site but if anything of his infrastructure is going to fail, it takes down [-]the coalmine canary[/-] HT first.

Unfortunately he started a number of years ago with design & infrastructure decisions based as much on ignorance & inexperience as they were on the small scale of his initial sites. Today he's outgrown his humble beginnings but to improve his architecture he'd have to take everything down and start over from scratch.

I don't know if you were around when this discussion board went through its assimilation pains, but it's probably way harder to [-]herd a bunch of cats[/-] agglomerate a diverse collection of websites than it is to start from scratch and build your own.

You might want to follow the business model that a shipmate used 25 years ago-- hire business students from the local colleges or MBA programs and pay part of their salary in profit sharing.

 

[billman]

I bought a domain, been trying to sell it forever. Thought it would be a goldmine. Am I allowed to post it here? Doesn't cost much to hold.

 

[Eladio]

Have some experience in this area.

Unique sites can generate a small monthly income through advertising and affiliate programs, but the drawback is getting reliable traffic to the site and then getting the traffic to convert into a reasonable response rate. Any site that I own generates all of it's income from less than 5 percent of the visitors. Plus, there is always competition from other sites, and when google "dances" your traffic and income gets really volatile.

On the plus side, unique content that people are looking for can bring in some money. It's residual income (write the content once, and keep getting paid), and most content sites are fairly low maintenance.

I'd avoid blogging, since it's quickly becoming a crowded area of the web, and requires constant attention and updating for any chance of online income.

There's so much more to say about owning online sites for income, but one thing is for sure, it's better to build your own unique site slowly and gradually and avoid buying someone else's "problem child".

Eladio

 

[TooFrugal]

Buying web sites is probably only a good idea to do if you are an expert at it. Sellers can buy traffic to make a web site look like it has high traffic in the short term, buy links for the short term to make it rank higher, etc.

Then after you buy the site the links or traffic may disappear. Also Google changes their algorithm all of the time, so today's high flying web site might trip some new spam filter tomorrow and suddenly lose all of its traffic literally overnight. Plus many web sites out there have content copied from other sites or books, so you also have to worry about buying a site and then getting sued for plagiarized content.

So unless you are an expert at understanding links, search engine optimization, spam tactics and traffic sources buying an existing web site can be pretty risky.

If you want to make money from web sites it is often easiest and least risky to just build your own sites with your own content, and start out in some niche area with light competition.

 

[Andy R]

If you are very familiar with website management they can be solid investments. For me it was the freedom of not having to work in an office that added tremendous value to the equation that is not quantifiable in money. We are expecting our first child in a few months and being able to work from home and enjoy more quality time with my wife and baby will be priceless.

Last month I was invited to Washington DC to speak with the staff of various Senators and Congressmen about small business like mine who operate free resources supported by sponsor ads. It was part of an initiative to educate our legislators that there are hundreds of thousands of small publishers who are trying to make a living through offering free services in hopes they will keep us in mind when reviewing potential legislation which is typically aimed at the big players but could end up really hurting the little guys. Here is a video that the IAB put together for this event and the launch of their new Long Tail Alliance, a service aimed at long tail sites like this one.

YouTube - I Am the Long Tail presented by the IAB

Websites can be good investments but they require more work then most people think. It's not mailbox money that rolls in without any work. Most people don't realize how much is involved and are just looking for a quick buck. If you have the time, passion and skills then I'd highly recommend websites as an investment. If you don't know much about websites then the risks probably outweigh the benefits.

 

[Arif]

Thanks to everyone for their input. The tax issue is interesting and is something I hadn't given much thought to. Thanks Andy.
Sounds like I'll have to do more research as the pool business slows down in a couple of months I can devote more time to researching this.

 

[BunsGettingFirm]

Yes, there is A LOT of work. It's like working at Microsoft -- you can work any time you want as long as you work 80 hours a week. OK, it's not that bad, but it's definitely not nerf ball fights all the time.

 

[laurinsane]

I agree. I would start my own from scarth if you had the time. I've been building my own website online (www.extreme-fitness-now.com) and it's earns me a small income each month. It's about a year old. It's nothing big yet, but I am hoping by the time I turn 30 it can become a valuable source of income.

I make about $50 a month from adsense ads alone. I also make some money through amazon and clickbank. My traffic right now is only 200-300 unique vitistors a day and has a lot of room for growth potential.

I would highly recommended building your own website.

 

[toofrugalformycat]

There is at least one rip-off business selling web sites for $5000. They include software to enable you to build it, hosting, and a class telling you about drop-shipping. An acquaintance bought two! And she's a salesperson, I'm shocked she could be scammed by a fellow salesperson.
You can get all this for free without paying for airline tickets to fly to the mid-west to take the class.

 

[Badger13]

Building web sites is one way I've learned to add to my income.

I remember a few years ago when I was on the phone trying to get a loan. The loan rep was telling me that my debt to income ratio was bad and that I was getting turned down.

I tried to explain to her that I couldn't get my expenses any lower.

She said some magic words to me that day, and I credit that woman with helping me out big time. She told me if I couldn't lower my expenses anymore, that I should raise my income.

Hmmm...

It wasn't too much longer after that when I started to learn to build web sites myself. I didn't know about code (I barely knew about the internet!) but I played around selling some stuff on eBay for a while, and got curious about controlling my own traffic.

Anyway, to make a long story endless, fast forward a few more years (today) and a big chunk of my income now comes from web sites that I build (and continue to build).

It's my opinion that the current economic environment will be solved one person at a time building her or his own business. And the internet is the best way to do this (well, to me it is). I'm a dyed in the wool loner and much prefer staying home with my little dog, so having a business where I have to be out in the world networking is way out of my idea of a good time.

But with the internet I get to build my own web sites. I'm still not good at code much, but I found a way around that with the site building tools I use. I like the control of building from scratch.

My newest site is [moderator edit] (I think I'm allowed to say that here?). Anyway, it's a few months old and I've gotten it built up to a point where it gets about 1200 visitors a month, and the traffic is nearly doubling each month. And since more traffic means more $$, I'll be making decent income on that one pretty soon. Right now the income is low because I haven't worked on that aspect of it yet. I figure I want to get the people there first and give them value first.

Anyway, I learned how to do all this with SBI!, which is great 'cause as I said I didn't know how to do code, or anything fancy online.

So Arif, if you're considering building a complete web site or starting yourself, you might consider learning to do it yourself. I like the control, rather than having to tweak someone else's work.

Success to you,
Amy

 

[SoftwareDeveloperII]

I'm bewildered at how others seem to generate positive cash flow from this. I haven't even broke even yet. And I know how to code!

Is the secret to buy lots of domains, build them all up, and hope you get some winners?

It's fun, but I'm thinking I'd get more return ($) for my time if I invested it in career/resume enhancement.

 

[tgotch]

I'm bewildered at how others seem to generate positive cash flow from this. I haven't even broke even yet. And I know how to code!

Is the secret to buy lots of domains, build them all up, and hope you get some winners?

It's fun, but I'm thinking I'd get more return ($) for my time if I invested it in career/resume enhancement.

That's a hard question to answer without more information on what you are doing. (e.g. what type of site, how are you trying to generate revenue, what are you doing for SEO, etc.)

Here are 2 webmaster related sites/forums I visit frequently:
sitepoint.com/forums/
forums.digitalpoint.com

Post some more information on what you are doing, and maybe we can help...

 

[SoftwareDeveloperII]

The types of sites I build are "mashups" - build something useful with existing APIs. All my domains were built starting June 2009, if time matters. It's funny, sometimes I'll get the site to the first page, but the next day the site is never seen from again.

All content is auto-generated, so I've got no "content" sites. My ads are normally amazon.com links because they appear (to me) to be the least invasive. I've tried targeting the audience based on Quantcast data.
For SEO I throw keywords in the URLs separated by '-' or '/', meta description, descriptive titles, submitted the sites, sitemap.xml, text is in html not in a flash object... but I'm really more interested in what YOU guys do to make all this worth it.

 

[Andy R]

Well it sounds like your in the Sandbox. Google's #1 risk is to have spam in their results. They know how fast sites grow, how many links you have, how fast those links showed up, etc. Basically they try VERY hard to prevent untrusted sites from cluttering up their results. Trust is huge and developing a reputation with their algorithm is essential IMO. You will get flagged as a spam site if you pop up out of no where and have hundreds, thousands or hundreds of thousands of pages of content. It's really tough to get ranked once you are flagged this way. I am not saying that has happened to you but it's definitely something that happens.

To me, not having a boss, scheduled work hours, ability to travel, all bring value to the equation, it's not a dollar for dollar comparison. I have over 1 million unique visitors to my sites each month.

 

[SoftwareDeveloperII]

I think that's where I was initially, maybe because the sites make heavy use of "tags" as a part of the sites feature of linking site content together. I think trust was huge because recently after having some sites link to mine and over time, the visitor count has picked up some.

 

[farmerEd]

Without giving away too much personal information, anyone want to list some bread-and-butter websites that actually generate a reasonable amount of income? I am not talking about the 1 in a million idea that makes a fortune, or the really low-end ones that generate $5/month...what kind of site generates 500-100-$1500/month in ad revenues? Or is the money made by having 300 sites each generating $20 a month?

I guess I just don't understand the math....

 

[Milton]

One "investment" that looks interesting is buying websites that produce monthly income from advertising. Anyone have experience buying websites/forums? I'm primarily interested in the consistency of the monthly income from advertisers and typical expenses.

I don't know anything about this industry, but the revenue stream that you are contemplating purchasing strikes me as somewhat ephemeral.

Presumably you would be buying a website that has been up and running for some time, generates so many 'hits' a month, and has one or more advertising contracts in place. But what happens if the vendor simply starts up a competing site? I guess you could always insist on a non-compete agreement, but it might well be difficult to police; and aside from the vendor, there are countless other people who can easily compete with you by setting up rival sites.

“In business, I look for economic castles protected by unbreachable ‘moats’” -Warren Buffett. With a few rare exceptions, a small website is unlikely to meet that test.

 

[SoftwareDeveloperII]

tax deductible as business expense?

what kind of site generates 500-100-$1500/month in ad revenues? Or is the money made by having 300 sites each generating $20 a month?

Without a ton of experience here, I can make some suggestions where you might look to find the answer: SitePoint.com, DigitalPoint.com, and WebmasterWorld.com.

You could try shopping around as if you were going to buy a website, and if you ask enough of the sellers, I'd guess that you'd be able to get a ballpark figure of what types of sites generate that revenue.

I'm not sure whether 300+ sites is the answer, but consider that you'll probably spend more on hosting and managing 300 sites than carefully building a smaller set.

I'm curious to find out if it's worth declaring oneself as an LLC and declaring the costs of website operation as tax deductible. Would anyone know off-hand?

 

[TooFrugal]

I'm curious to find out if it's worth declaring oneself as an LLC and declaring the costs of website operation as tax deductible. Would anyone know off-hand?

If you run your site like a real business, then the costs are deductible anyway. The LLC just gives your business limited liability and protects your personal assets in case of a business lawsuit. Otherwise, if you your business is sued and you are operating as a sole proprietorship, you could lose some of your personal assets, like the equity in your home.

I'm not sure whether 300+ sites is the answer, but consider that you'll probably spend more on hosting and managing 300 sites than carefully building a smaller set.

It is often a good idea to have a mix of different sized sites, because sometimes the Google algo favors niche sites and sometimes larger sites get more of a boost.

 

[SoftwareDeveloperII]

If smaller means niche, it seems like it would be easier to start by breaking into more numerous smaller markets before going after a large one with a big site.

 

[Andy R]

Here is an article I really like about the Mega Niche.
Wired 14.11: Tiny Slice, Big Market