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How I made ~$55,000 in 20 months on a website flip

Escrow.com Transaction

$42,000 Escrow.com Transaction

Last month I sold one of my websites for $42,000 that I had previously purchased for less than $15,000 roughly 20 months ago.

In the time I owned the website I also made just under $30,000 from running the website as well. After factoring in the expenses from running and selling the site I made about ~$55,000 in profit.

The best part?

I did this with a niche I knew little about and I never wrote a single piece of content for the site.

Let me tell you how I did it

Let me start by saying that for this specific sale I can’t share the URL or niche of the website. Sure that would enhance the financial voyeurism on display here, but this is one of those deals where I can’t share all the details. (Want more real life examples? Read example 1 and Read example 2)

How to make money buying and selling websites

To make money from buying and selling websites you’ve gotta first find the right websites worth buying. Next you’ve gotta take the website, work on generating more traffic and making more money from the traffic you receive.

I’ve found it’s much easier to make more money from existing traffic than it is to generate more traffic to a website. This is partly due to the fact that quite simply just adding in a new revenue source can increase how much money a website generates (a single line of JavaScript sometimes). I’ve been making money from websites for over half a decade so I’ve gotten pretty good at just looking at a website and instantly identifying a wide range of new revenue generating opportunities. On the other hand, increasing traffic takes a little more effort but is also doable as well.

Now I’ve already written a book and several blog posts detailing the ideas behind buying and selling websites, so instead of rewriting what I’ve written before I’d like to instead spend more time discussing the specifics of this sale. If you’d like to learn more here’s where you can start:

My book on buying and selling websites (includes real life examples etc):

Buying Websites – How To Invest In Online Real Estate

 

My first six figure website sale (still working on a seven figure sale):

How I Sold A Website For Six Figures

Six part blog series detailing a website I bought:

Introduction – How To Buy A Website
Part 1 – Two strategies to employ after you acquire a website
Part 2 – How I drastically increased the income
Part 3 – Long term income case study results
Part 4 – $4,000 Investment Paid Off
Part 5 – How to buy websites and profit in less than 12 months

The Story Behind My $42,000 Website Sale

I’m more of a buy and hold style investor as I prefer to find great websites and grow my monthly income as I grow my portfolio of digital assets.

But occasionally I will sell some of my websites. Earlier this year for example I sold off almost all of my websites that were making me only a few hundred dollars per month (those primarily came from earlier times when I wasn’t as focused on bigger projects). It probably wasn’t worth the effort but cutting my total domain portfolio nearly in half over 2013 has helped me focus on my remaining more lucrative websites and projects.

Here Are The Numbers:

Purchased for less than $15,000 in early 2012

Sold for $42,000 via Escrow.com transaction

Earned ~$30,000 in profit while I owned it

Average income for past 12 months: $1,511.93 per month (when I bought the site the income avg was about half that)

Income sources: Google Adsense, Amazon Associates, Other display and affiliate revenue

Total net to me ~$55,000 in profit

URL: Can’t disclose

Niche: Can’t disclose

Buyer: Can’t disclose

Now I’d like to cover some of the main questions people had for me which can shed some light on this transaction and the mindset behind how I negotiated this deal and some of the nuts and bolts of the sale.

Please do ask questions at the end and I’ll update this post with more information.

How I Sold The Website:

In this case the buyer found me. I wasn’t looking to sell because although it was a smaller source of income in relation to my overall business at “only” $1,500 per month it was a nice asset to have in a niche unrelated to anything else I was doing (and it more than pays the mortgage on the cheap house I bought last year).

The buyer initially offered me $25,000 over the phone without knowing a lot about the site other than traffic numbers. Even though I knew that was low (and so did the buyer) I proceeded to put together some financials for the site to better justify the price I wanted to get.

Website Multiple

Part of the spreadsheet I used in negotiation.

I created an Excel spreadsheet of all of the income sources and sent it over while at the same time explaining in the email response that a $25,000 offer would be under 1.5x yearly earnings and not high enough for me to justify selling the website.

The buyer then came back to me with an email offer of $35,000 (up from $25,000). Before this point I never told the buyer what I wanted for the website other than that the first offer was too low.

After I got the $35,000 offer, I countered back in an email response explaining that based on the age of the website, income history, traffic history etc that I believed the website should be valued in the 2.5x yearly ($45,357.90) to 3x yearly ($54,429.48) price range.

Caveat: I didn’t pick up the phone to counter verbally because I’ve found that in negotiating situations most people prefer to avoid hashing it out over the phone and to instead work towards getting into the same ball park price wise first. (I actually don’t mind battling it out over the phone when you can get instant feedback on what the other party is thinking).

The buyer replied back via email thanking me for my feedback and set a time to discuss the offer the next day. When we got on the call the next day the buyer offered $40,000. Because the offer only went up $5,000 and based on the tone of the conversation I could tell we at or near top range for this deal.

I still felt that I could get a little better offer so I basically said while I felt the site was worth the price range I shared in previous emails that at $42,000 they had a deal. It was only an extra $2,000 but I’ve found that in negotiating when you’re close to a deal and on the phone you should always ask for a little more most people just want to be done negotiating. That’s why I prefer to finish final negotiations on the phone in part so that I can feel the other party out and also so that I can ask for a little more.

I don’t think I’m an expert negotiator or anything, the above are just based on my observations in business over the past several years and from my past experiencing negotiating all kinds of things in my business.

Did You Use A Lawyer?

After I signed the letter of intent (which is basically is a good faith document that says both parties are working towards closing the deal and typically includes a provision that the seller can’t go out and try to sell elsewhere) there was actually quite a bit more back and forth with regards to the asset purchase agreement.

The buyer put together the initial asset purchase agreement and my lawyer went through and had a lot of changes but we eventually came to an even ground.

In total I paid my lawyer $1,295 but that is money well spent.

I’ve been using the same lawyer for the past several years. Nate Webb at FocalLaw.com. I’ve also worked with Venkat Balasubramani at the same firm as well but not on this deal.

I wasn’t compensated or offered reduced services for mentioning FocalLaw, I’ve just had a good experience working with them and wanted to share with others. Now if I happen to receive a random Xbox One on my doorstep for Christmas from Nate/Venkat I’ll update that in this post. ;)

What Would I Have Done Differently?

At the beginning of this post I mentioned that I was able to buy this website for under $15k, pay someone else to write the content, make ~$30k while I owned it for 20 months before selling for $42k to net me ~$55k in profit.

I believe this site could have been a six figure exit in different hands than mine, but the problem is that as I said before I knew nothing about this niche. I only bought the site because I knew there was some opportunity to improve it with minimal effort on my part.

Even though I didn’t do any of the content for the site, the fact that I even owned the website still placed some level of burden on my mind of “Hmmm what else should I do with this website?” “Do I need the writer to finish up some more articles?” etc and those types of questions could distract me from larger opportunities. This is again part of why I decided to sell was to focus in on bigger things in 2014.

I stopped buying websites for less than $10,000 a while ago and moving into 2014 perhaps I need to up my price as a buyer to $50,000 or more so that effort I put in can provide me even greater returns.

I already made an offer on another website to buy for $175,000 but the owner wasn’t looking to sell at that price. If we could have got a deal done for around $200,000 I would have brought on another investor to go in on the deal though because I’ve yet to buy a website for that much money but it didn’t work out.

Overall

With ~$55,000 in profit altogether I’d call this a pretty solid base hit deal and while I’m still working on hitting my first home run ($1MM+ exit) or grand slam ($10MM+ exit) if I can keep stringing together solid base hits like these while living well within my means at the very least I should be able to retire if I want to ahead of my 40th birthday in 10 years.

I structured the details of this post differently than I have in the past in part because I can’t share the niche, the URL or a whole lot more about the sale but I hope this was still useful for you to read. With that said, I’ll be updating this post with answers to questions that you share below so please do ask away.

Note to the savvy prying readers: The website I sold is not and has not been on the server that my blog is hosted on. Obviously I have multiple hosting accounts so a reverse IP lookup will only reveal websites I don’t care anyone knows about.

Update: I posted a video logging into my Escrow.com account to quell any doubts

This video was included in my November 2013 income report where I revealed that I had earned $86,401.31

How To Make Money With Websites

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42 comments… add one

  1. Thanks for the great share.. i will use you outline for my own niche site in nearest future.

    Reply
  2. Are these figures real? I am going to ask a friend from IRS to check if you are indeed earning this much, or if this is just scam techniques to trick people.

    Reply
    1. Ummm… lol yes Rhian they are real and yes I pay (a lot of taxes) on my earnings. When I share my income report I’ll film a video logging into my Escrow account etc so that you can see.

      Reply
  3. Great post man, I’m happy for you.

    I’ve just started a niche site and am hoping that goes well.

    By the way, how do you generate more traffic to the sites you purchase?

    If it’s through SEO, then how do you do your keyword research besides using Google Adwords.

    Thanks

    Reply
    1. Hey Rahat, typically I look at at where the site is doing well and then look for ways to improve that. If it’s Pinterest then more images style content that will be more likely to be pinned. If it’s SEO then looking at the types of articles that are ranking well and writing more of those and also looking for new angles. I use LongTailPro for my research. Discount link here: http://entrepreneurboost.com/longtailpro

      Reply
  4. Congrats on the sell Chris. Very inspiring article!

    Reply
    1. Thanks Grant!

      Reply
  5. That’s a great and very interesting article, Chris. Also the way you have handled the negotiation brought out the the worthy price of the asset. I have seen few people selling their sites on flippa, put crazy prices but forget to justify it with proper analytics and proofs which is why bidders don’t bid on them. I guess they have to read this article on how to handle the transaction smoothly.

    The six part series is awesome and provides a great learning edge for the beginners and I shall recommend it to my readers. I have also written an article on my blog where people have to be careful in analyzing the income proofs while buying any website online [ flippa etc.]. If possible, check it :)

    Regards
    Phanindra

    Reply
    1. Thanks, glad you appreciate all of the info I shared.

      Reply
  6. Hey Chris,

    thanks for sharing all this. I really enjoy your real world case study posts! Hope to read more soon :-)

    Reply
    1. Thanks Phil, yah I’ve got some more on the way. Will also share some of my failures as well.

      Reply
  7. Can’t fault buyer for wanting the niche and URL kept secret. He doesn’t need the competition from all your readers. lol I have a couple questions for you Chris.

    1. For someone purchasing a $20-50k website or greater, would the lawyers handle the due diligence such as verifying the site page rank, income, traffic etc, or is this something that you would prefer to do yourself? BTW, are there many lawyers out there experienced conducting due diligence of web real estate properties?

    2. Is 2.5 times yearly income the typical resale value of a web property?

    Reply
    1. Hey Mike,

      1. Lawyers don’t typically handle due diligence on websites in my experience. I’ve not sold a website for 7 figures on up before but perhaps in those larger sales they could be more involved. At these lower stages you typically would need to be the one doing due diligence. There are a few companies out there that handle due diligence but I’m not familiar with them.

      2. No it’s a bit higher for a website selling under $100,000. That’s part of why I decided to sell was that I was getting near 2.5x yearly.

      Great questions thanks for asking,

      Chris

      Reply
  8. Thanks for letting us know, Chris. You got yourself a great deal on that price.

    Reply
    1. Thanks Michael!

      Reply
  9. Hi Chris, that’s awesome to profit in $55K from a site.

    Thanks for sharing this inspiring story with us. Would I know what the monetization model of this site? Is it in Adsense, ebook sale, or Amazon Affiliate?

    $1,511.93 average a month is great! I’m almost getting there this Dec.

    Reply
    1. Yah it was Adsense, Amazon etc (see above in post perhaps you missed it)

      Thanks Kent

      Reply
  10. What’s up Chris,

    This is extremely impressive.

    I’m 100% on board with you when it comes to online real estate.

    I call it Virtual Realty, but the point is clear.

    Why pay $30k on a rental house when you can pay less than 10% of that an own a piece of the internet that generates even more income?

    With less risk?

    Thanks again for sharing, Here’s to the best year ever in 2014.

    Reply
    1. Hey Darnell,

      Yah I mean that’s the idea behind buying websites, but there is a lot of risk don’t let this post fool you. With real estate there isn’t really any business that can come by and relocate your house to a bad neighborhood one day thereby lowering the property value, whereas Google can come along and slap a website into lower traffic levels without warning. So I believe there is a bit more risk with buying websites personally but that the rewards outweigh the risks.

      Thanks

      Reply
  11. Great work Chris. That’s a tidy sum for flipping a website. I’m keen on buying some cheap websites and flipping them for profit.

    I may keep my eye out for blogs that are no monetised properly :)

    Reply
    1. Hey Kevin,

      Thanks for commenting. Yah under monetized websites with solid traffic can be great finds!

      Reply
  12. Awesome Chris!

    So, just for fun, let’s apply some logic/math using my “Seven Year to Seven Figure Real Estate Plan” – but for websites.

    You put down $15,000, made $55k total in profit, meaning at the end of 2 years, you’d have turned $15k into $70k.

    If you use those same percentages – and bought a website for $70k (if you had saved all the cash flow, and took the final amount and used the whole amount for the next purchase) You could turn that $70k into $325k in 2 more years. 2 more years after that you’d have 1.3 Million. This is my favorite real estate investing, what I call “Hybrid Investing” or “Trading Up.” Amazing potential by recycling capital rather than living on it, and HUGE potential because of exponential growth.

    So, it all comes down to: do you think you could do that same thing, on a larger scale?

    Have you thought about trying?

    This fascinates me – because when you do this with websites, it’s MUCH faster than with real estate. However, there is also more risk of it going down in value, perhaps? What do you think?

    Reply
    1. Hey Brandon,

      Always great questions and comments from you. I had a conversation with a guy from New York who heard me on a podcast or something like that earlier this year and he asked me the same thing. He basically said “If I can get you $20MM dollars what type of returns can you get me?” This is something I’ve considered doing: Basically building a hedge fund but for websites type of thing.

      That said the game is much different at the more than $100k websites on up past $1MM+ websites. I think it can be done profitably I’m just not sure if I’m ready to take on that type of project. There is a ton of risk and even if investors knew the risk it’d be still nerve racking to try this at scale and at much larger numbers.

      Chris

      Reply
  13. Its always appealing for me whenever I get to read a post that highlights “how a certain $K was made within a short period of time online”. This post is one of such posts.

    I am specifically enthralled by the fact that the huge amount ( by my own standard) made within 20 months was from flipping a website. It goes to show that there is still some “juice” in website flipping.

    I guess I would have to learn more by reading the book to get ideas on what the basics are in buying and selling websites. A helpful post to me I must remark!

    In kingged.com – the social bookmarking and content syndication website for Internet marketers, I have left the above comment where I found this post.

    Sunday – kingged.com contributor

    http://kingged.com/how-i-made-55000-in-20-months-on-a-website-flip/

    Reply
    1. Thanks for taking the time to stop by and comment I appreciate it :D

      Reply
  14. Hey Chris !

    We spoke briefly before December and you were very helpful, I have been on holiday for the last 2 and a bit weeks but as soon as Xmas is over I’m hitting the online business full on, your posts such as these are not just helpful, but motivating so I appreciate it.

    Happy holidays !

    Reply
    1. Hey Phil, thanks for taking the time to comment and happy we were able to connect before. Keep at it and don’t get discouraged. It’s normal to fail at first :D

      Reply
  15. Hi Chris. Thanks for the information.

    I run a number of websites, one is linked. But all are very technical and I’m having a hard time finding writers to help me out.
    I’ve tried a few things ranging from giving them a subject to asking them to rewrite and enhance something I quickly wrote. None of that seems to be much help.

    Do you think it’s possible to find solid technical writers? And if yes, any idea where to find them and what to pay them?

    Enjoy the holidays :)
    Peter

    Reply
    1. I’d look for other websites on similar topics to find writers that way (now it seems like people always have their twitter linked), follow up with the most passionate people that post comments on your websites to see if they’d like to write and maybe even look on forums like avsforum.com I believe is the site.

      Reply
  16. Awesome! Hope I can learn from you. Anyway, do you have any listing template to be giveaway. Smile.

    Reply
    1. Hey Mikel – what do you mean by listing template?

      Reply
  17. Congrats Chris for your success in Website Flipping industry. I have also recently started using this process to make money. I am sure that I will soon see the face the success. Hope you will not mind giving me some tips on how to be a successful website flipper.

    I recently posted an article on my Blog about how Flipping can be used as an online income source. Hope you will be interested to read : http://itamal.com/make-money-flipping-websites/

    Reply
    1. Hey Tamal, thanks I’ll check it out.

      Reply
  18. Hey Chris,

    First of all congrats for this great deal.

    It is an extraordinary deal. I can’t imagine whether is possible for everyone. Or everyone is not so lucky to get such a deal.

    Reply
  19. Congrats on the success Chris!!!

    Could you give some info about the type of websites that get sold at these prices…like how many pages..do these sites include mailing list…do they have their own Twitter/FACEBOOK pages that get transferred to the new owner…etc

    This would be really appreciated.

    Cheers.

    Reply
    1. Hey James, this site had several hundred pieces of content, mailing list, social media accounts etc. It’s all pretty easy to transfer that stuff though.

      Example: Facebook – just add the new owner as a friend on Facebook then make them a page admin. They then remove you from the page. Twitter – just give them a password. Newsletter – just email company to move to new account or export leads and send to new owner.

      Reply
  20. Hey Chris

    First time visiting your blog but you have some great content on your blog. I will be bookmarking your blog and keep coming back to it. Its that good!

    What was the break through moment for you in which you thought I’m going to quit my job?

    What are the main sources of advertisements you use to spread the word about your blog and increase site traffic.

    Great income report though, Chris.

    Thanks for the content

    Reply
    1. Hey Adnan, well I didn’t quit my job I was fired lol. So the breakthrough moment was when I was making near 5 figures per month from Amazon and got fired. Then I thought “Well I’m making too much money to qualify for unemployment and now I’m making more from this than my day job so I’ll just keep on doing what I’m doing”

      Reply
  21. I am generally against selling websites. Good ones are so hard to come by or build. However, I understand why you couldn’t resist the offer for this website. Several times I had good offers for my websites and several times I was grateful not to sell them. Nothing beats the regular income and anticipation of even higher returns.

    Reply
    1. Yah I generally prefer to buy and hold for the long haul but if good deals come I’ll take them.

      Reply
  22. This is great and all but there’s one thing I don’t quite understand.

    If it is a specific niche, couldn’t you have invested the 1500$ a month (or a 100, or 500) into advertising the website?

    Which the would logically increase the views and profit over time.

    I understand you didn’t know much about it but still, being able to hire someone to work on the website could of got that pretty much covered.

    Reply
    1. The site makes money from advertising and affiliate marketing. It’d be pretty unlikely for me to be able to pay for advertising at a lower rate and make it up from the earnings I generated.

      Reply

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