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ROI of Website Ownership - Part 2 - Flipping For Big Returns
By Max | April 11, 2007
A few days ago, I discussed how a website can be a great investment earning a 50% or more return for you. There is another way to earn even larger returns. You can buy and sell websites in the same way that people flip real estate. Buy a site thats not earning to its potential, fix it up and then sell it for huge profit. The value in this strategy is a combination of how much you initially pay and how much you can increase the earnings.
Suppose you bought a website for $10,000. If you have identified some key oversight in ad revenue that its owner had missed, then you are set up to flip. If the site was earning $800/month when you bought it, and you increase the earnings to $1200/month you have also just increased the value of the site by 50%. After waiting a couple months to create an earnings history, you decide to sell.
Someone will probably come along and pay $15,000 for a site earning a reliable $1200. Thats only about 12 months of profits and would still be a good deal for the purchaser. So you made $2400 while you ran the site plus $5000 on the sale. Thats a $7400 profit on a $10,000 investment in just 2 months. Thats better than a 400% return annualized. Take your $17400 and move on to a larger site.
Topics: Article |
April 27th, 2007 at 3:58 pm
This is exactly the principle behind property flipping. Buy a slightly run-down house for £200K, put in a new kitchen, decorate, and tidy the garden for £20K, sell for £300K. Simple. The question is, when will this be considered good tv, like property shows are.
April 28th, 2007 at 2:22 am
You bet. Except I believe there are far greater profits to be had in the internet game. There are a lot fewer players, and a lot of people selling sites who don’t know what they are sitting on.
Real Estate flipping has been around for a while, but it really got a boost with the latest runup in real estate prices. I think a lot of the “flippers” who jumped in to real estate in the last few years are just realizing gains because of the underlying appreciation rather than adding actual value to a property.
In both real estate, and website flipping, the real value is found by paying below market for a property. It is hard to find the real value gems in either market.
June 17th, 2007 at 12:23 pm
[…] up in websites, so I am really going to try to find one that I can improve in some way and then sell for a profit rather quickly. Wish me […]
June 29th, 2007 at 3:30 pm
[…] a little luck, I think I’ll be able to increase the value to $15,000 in the next few months. 50% ROI for flipping a website in two months isn’t […]