Flipping websites is profitable because of how website valuations work and the ongoing passive income generated while growing the site. This causes a powerhouse combination for a profitable business model.
I’m a huge fan of website flipping. The skills learned from multiple flips, study, and years of experience can be applied to every single flip that follows.
Which makes an already profitable practice even more so. A good website flipper needs to understand how content-based sites work, SEO, and monetization. The good news is that all of these skills can be learned.
Let’s dive into the world of website flipping!
Table of Contents
What is Website Flipping?
Website flipping is the practice of buying an existing website, improving its traffic & revenue, and then selling it for a higher price. The difference between the buying price plus growth expenses and selling price is the profit.
The better a website flipper is at identifying great topics/keywords, creating great content at scale, ranking in Google, and optimizing the monetization, the bigger the results will be.
Don’t let this scare you off. I didn’t know all of these things when I sold my first site, or fifth or twentieth. That first site sale was still very profitable.
The skills built from flipping even a few websites are the same skills used in flipping any in the future.
Why Start a Website Flipping Business?
One of the biggest reasons is money. The potential ROI on a website flip puts many traditional investments or salary wages to shame.
Since the monthly multiple plays such a large part in how content sites are valued, that means that for every $1 of additional profits I add to the average monthly revenue I can get $35-40 or even more on the sale price.
Many scenarios look like this:
I buy a site for $5,000 and I spend $10,000 for content, better hosting, premium theme, etc. for a $15,000 total investment. The site is making $3,000 a month after about 6 months of work.
At a 40x multiple the site sells for $120,000, which is almost a 700% ROI in less than a year. It is over 700% when you consider the revenue the site made while improving it also went to me.
Aside from being profitable, a website flipping business can be built to the side while working another job, a career, or dealing with life obligations like being a caretaker to an elderly family member.
This makes it much more viable than a second job for many people, not to mention I see the upside of flipping sites as being much higher.
How Does it Compare to Traditional Businesses?
Website Flipping has a lot of advantages over traditional businesses. While it has no more guarantee of success than any other business, there are a lot of things to like about website flipping as a business.
The flexibility, ability to effectively build this business while working another job/career, and the ability to systematize large parts of the process while scaling make it very unique in comparison to the majority of traditional businesses.
Advantages
- Flexible schedule
- Amazing potential ROI
- Learned skills are valuable and used on each sale (repeatable process)
- Relatively small startup costs
- Can scale easily over time
- More control over the fate/profitability of your business
Disadvantages
- Harder to get traditional business funding from traditional sources like banks
- Requires active work to find new prospective investments and acquire new projects
- Scaling effectively requires a lot of working capital
What Makes Website Flipping Profitable?
Two major factors make website flipping very profitable: the multiplier used in the website valuation which allows leverage of results and the high demand from investors that want to buy websites.
The website valuation formula used to determine a good selling price for a website takes the average monthly income times the monthly multiplier. The monthly multiplier is a range affected by a variety of things including current demand.
So if the multiplier is 30x that means the selling price is 30 times the average monthly income that the website brings in. In that case, every single $1 added to the monthly income adds $30 to the selling price.
$100 extra a month equals $3,000 in that example. $1,000 a month is $30,000 on the sale price. And 30x is actually a low multiple.
Good sites can often get 40x or more depending on how hot the market is at the moment.
The other is demand. People want passive income. They want cash flow. They want to diversify their investments. This creates a strong demand for websites that consistently bring in monthly income because it’s one of the few investments that meet all three of those criteria.
Why Flip Websites Instead of Enjoying Passive Income?
A lot of this comes down to preference, interest, and goals. There’s nothing wrong with flipping websites for profit, and there’s nothing wrong with building websites for long-term passive income.
So what are the advantages of flipping sites?
One is the large cash on hand payments. Projections are just that: projections. With the hope there’s no huge market shift, changes in affiliate terms, or competition that knocks your site down.
But if I sell a website site for six figures, that cash is in my checking account. That payout is in the bank and I can use it for reinvestment, retirement, paying bills, living off of it, whatever. There is additional security from flipping the site to have that cash on hand.
Flipping one early site can give the funding needed to get two or three up and running. That makes scaling much easier whether you’re looking at more flips, keeping the newly scaled sites for a large passive income stream, or doing both in the future.
How to Approach Website Flipping
After nearly 200 website flips, I know what I’m looking for in a potential acquisition for a future website flip. When I’m looking for my next project to invest in, I’m looking for the following five things.
Finding Ideal Assets
I’ll spend a lot of time looking for the ideal site. The way I approach potential deals is to look for a reason to say no. While some website flippers might be willing to work with sites that have potential but some red flags, I want ideal assets.
These are sites that have:
- Spottable easy wins for growth & improvement
- Niches with good RPM
- Strong content (ideally from hobbyists who know the niche but not about making money online via websites)
- Have decent rankings but can do even better
You can find websites to buy by using the best website brokers.
Find Areas of Growth Potential
This applies to both traffic and monetization. If a site’s only monetization is Google AdSense or Amazon Associates, that tells me there’s major potential for better monetization.
If the website already gets decent traffic but hasn’t done any SEO work, has no social media, and is making some basic on-site SEO mistakes then I see major growth potential for traffic.
Finding websites to acquire that have at least one of these, and preferably both, means massive growth potential even if the execution of scaling plans isn’t perfect.
Negotiate the Price and the Sale
While there is a general range for what content sites are expected to sell for, there can be a lot of variance within that formula. There might even be times when the seller wants a set price that is outside that range, but I know with my skills it’s still a good buy (not a decision you should make if you’re a beginner or relatively new).
The price is always negotiable and you should work to get a better deal. Each dollar you don’t have to spend to acquire the site is a dollar that can be reinvested into making the site better and more profitable.
Make It Better
The core of profiting from the flip is making the site much better, and as profitable as possible. Getting the average monthly revenue up directly affects the profit, but so can things like getting quality backlinks which helps to move the multiplier amount to the high side.
Improving the website in all ways improves monthly cash flow while holding the site but then also makes the asset more valuable when it’s time to sell.
Flip It
The final step is paying off all the hard work by flipping the website. This is where the big payout should come for all the hard work and money invested into making the site better.
I want to negotiate for the highest multiple possible to get the best selling price.
Main Takeaways
Website flipping requires a set of skills for extended success, but these skills are all learnable. Flipping websites can be a very profitable side business and even make it easier to create a stable of “side sites” with passive income in the long run.
- Website flipping can be incredibly profitable (great ROI)
- The skills needed to be a successful site flipper are learnable
- Multiple advantages exist to flipping vs holding for passive income
- Growth is key
I hope you found this article helpful and useful in beginning to learn the skills needed for flipping websites for major profits.
