Is Website Flipping Still Profitable in 2020?
Website flipping. It’s similar to flipping houses in real estate: you buy a website, improve its design & copy (just as you renovate a house to improve its appeal), and then sell it for profit. Between 2004-2012, online entrepreneurs had been obsessed with website flipping… and for good reason. The digital equivalent of house flipping allowed them to make good money, without the hassle of mite-infested rugs, back-breaking labor and massive capital layouts.
1. The State of Website Flipping
Several budding flippers are motivated by the thought of high-profile deals such as ToyRUS’s $5.1m payout for Toys.com, or Discovery Communications’ $10m acquisition of Treehugger.com. But most are content with flipping on a much smaller scale, buying sites that are making a few hundred dollars, improving them, and then selling them for a profit.
Making Sense of Cents’ Michelle Schroeder is a prime example of someone who has achieved this. Her overall income comes from multiple sources, including website flipping. She bought a website for less than a thousand dollars. The previous owners weren’t actively updating the site, and that’s why Michelle was able to buy it at a good price.
For building the site up, she published content on a regular basis, kept tabs on quality, and networked with other website owners on social media. These were the things that former owners of the site stopped doing. The boost in her income at the time of the sale indicates that she made a decent profit on the flip.
All that makes website flipping sound lucrative, doesn’t it? But you might be thinking: what are the odds of me buying a decent website and turning it into a profit?
You’re right; they’re minimal.
I remember buying a gem of a site from Ryan at Digital Acquisitions when I was just getting started in this industry. Over the years I’ve bought many more sites from Ryan, but good quality sites as I said, are much harder to find these days.
The business itself has gotten harder in recent years. The world is running out of good websites. Google algorithm changes have made it hard for all kinds of sites to rank well in search. The secret is out on how to get started with website flipping. Anyone can flip a website with a bit of capital, a good writer, and SEO tools for generating traffic.
These arguments made me wonder: is website flipping still profitable in 2020? If I were to give it a shot, would it generate a decent enough ROI to help me cover my rent?
Well, it depends.
If you want to start flipping websites just to make a quick buck, you may be out of luck. If you’re willing to understand the mechanics of this business and approach website flipping in a strategic way, you have a better opportunity to succeed. Of course, you’ll be making mistakes in the beginning (perhaps even struggle to break even). But soon you will be able to overcome the learning curve and realize the income potential in this market.
2. How to Approach Website Flipping Strategically
Again, website flipping isn’t something most entrepreneurs start and make a fortune from quickly. It takes a while to understand how the market works, what’s trending, how to attract buyers, and what can make you a decent sum.
If you’re willing to put in the work, then I see no reason why you shouldn’t start website flipping. Here’s a guide I’ve put together to help you get started on the right foot.
i. Consider A Website That Has Decent Traffic
To make money with website flipping, you first need to find a website that’s already generating income Next, you’ve got to work on improving and fixing it. I feel it’s much easier to profit from existing traffic than it is to drive traffic from scratch. For instance, integrating a new revenue source on top of the current ones can increase a site’s revenue.Another reason to buy an established site is that it has a performance history to measure from. If it has generated $2,000 a month in profit from Google AdSense, you can see what phrases resonate well with search engine users and where AdSense can be scaled. You’ll also be seeing the design of the site and what changes you can make to boost profits (optimize AdSense placements, integrate another ad network), etc.
ii. Vet It
Once you find a website that fits your criteria, check its history first. Even if it looks obvious for a certain industry or niche, investigate what else has been associated with it. You can do this with Archive.org or another similar tool.
Here’s what Archive.org shows for my own site when I choose 2017 (it displays the URL of one of my posts, which indicates that the site published digital marketing related content in 2017).
This tool enables you to go back in time and see how the website was at that time. Though it’s just a cookie storing service, it’s a great tool to know what type of content was published back in time. Another thing you should do is check out the backlink profile of the website. Use Majestic’s Site Explorer tool to check the referring domains, anchor text, and the number of backlinks.
If the referring domains are from phony websites (fake brand sites, empty page sites, etc.), I recommend you to move on and look elsewhere. Other than that, check the ban history of the website through isbanned.com – you wouldn’t want to invest in something that is banned from Google’s search index.
iii. Increase Your Websites Appeal
People always think that there is some special tactic or trick that entrepreneurs use to increase the appeal of a website, but it really boils down to four things:
- Good theme
- High-quality content
- Revenue stream
These are the four pillars to success in the website flipping game.
For a theme, I suggest you visit ThemeForest. It’s a marketplace that sells premium WordPress themes. If you aren’t using WordPress, site-builders like Wix and Squarespace too offer beautiful templates that you can customize to your liking.
As for the revenue stream, implement Google AdSense if you are after ad income or Amazon Associates if you are looking to start an affiliate marketing site where you get a commission on each sale you refer to a brand/company.
iv. Calculate Your Website’s Worth
This is probably the most important factor for website flipping. How much should I sell my site for?
When you sell a website, you also sell the domain, the content, the source of income, and the whole idea behind it. Typically, websites sell for 2-3 times the income they bring in a year. So if your website generates $500 a month in profit (or $6,000 per year), you could sell it between $12,000-$18,000. Certainly this isn’t set in stone, but you could use the example as a reference on how to calculate your website’s worth.
v. List Your Site For Sale
You may get a direct offer from someone, but it’s not smart to leave things up to chance. Fortunately, there are several marketplaces where you could put up your site for sale. The most popular ones are:
You can opt to sell the website for a fixed rate or do an auction. Identifying what is the best option for each website is tricky, but that experience will come with time.
If you have a good idea of what your site might sell for and you’re not in a hurry, setting the price and leaving it to the marketplace is a good strategy. However, if you know the potential of a website and think of it as something that others will pay a hefty price for, it might be a good idea to do an auction. Of course, this comes with the risk of you getting less than what you invested in it.
3. Ready To Flip
You can make good profits by flipping websites, but you can also end up losing money (and this happens to a lot of people). Veteran website flippers might have great track records, but even they don’t make a profit on deal they do. Personally, I recommend you start out slow and small and work on making your acquisitions attractive. You don’t need to buy a 6- figure high-end website from the get-go. Just stay in your comfort zone and buy something that you are comfortable affording. It could be as low as $1,000 or $10,000 depending your finances.
Hopefully, by now you have a better understanding of what it takes to flip websites for a profit. There’s a process to it and money isn’t guaranteed, but if you put in the time you can give yourself a leg up in earning a sustainable income online.