Revealed: How I Doubled the Value of Websites I Bought on Flippa

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This is a guest post from Yaro Starak from entrepreneurs-journey.com.

I’ve made a living from my blog for more than eight years now. Screen Shot 2013-12-10 at 1.31.10 pm

Several years ago I decided to take some of the money I was making from my blog and reinvest it into purchasing more sites to create a stable cash-flow source. I wanted to diversify my income and grow it.

For many years I was familiar with the Sitepoint forums, in particular the buy and sell websites forums that would eventually grow to become what Flippa is today.

I began a habit of watching the marketplace at least once a day. I believed that to beat the competition, I would have to spot the good deals on Flippa early. I quickly became familiar with what sites were selling, what information to look out for and how to determine what a site was worth to me.

Since my goal was to create a near-passive income stream, I decided that my investment strategy would focus on acquiring two different types of websites:

  1. Blogs (because I knew how they worked)
  2. Forums (because they run off community generated content so could be very passive)

Step One: Act Quickly on a Good Deal

Over the next few months I missed out on a couple of sites because I was outbid or too slow, but eventually I found what looked like a good deal.

It was a collection of three websites – two forums and a small video sharing site – all about miniature motorcycles. I had no clue what exactly miniature motorcycles were, but the data on the two forums was good:

  • The sites collectively made about $1,000 a month, mostly from AdSense (and almost all of it from the forums)
  • The forums appeared relatively active (I checked how many new threads were started each day for a number of days)
  • The Google Analytics and Google AdSense account information looked legitimate and realistic

My only concern was the buy-it-now price. It was at $12,000, which was a bit over my budget. I did some quick due diligence, asked the seller a few questions, and everything looked pretty good.

I made an offer at the buy-it-now price, since it was reasonable to pay $12,000 for a website that made $1,000 a month, especially since I could see plenty of ways to increase the income. I didn’t want to risk missing this one. The deal was done smoothly and I was in charge of some miniature motorcycle forums.

Step Two: Get Help If You Want Passive Income

I still had a lot of work to do. I had to transfer the sites to my own servers, then I needed to perform the “renovations”, which included some slight design changes to the website layout to include more advertising (the lowest hanging fruit in my mind for increasing the income was optimizing the advertising).

To get this done I needed a tech person, which I already had because they helped look after my blog. I also needed a manager, someone who could oversee the renovations. To perform this role I hired a college friend of mine, who had helped me with a previous blog I owned.

With these two people in place the only job left to me was thinking of ideas about how to improve the sites, which I had plenty of (more on this next step).

Once the sites were transferred over to my servers and everything was running smoothly, I told my website manager to begin some tests to increase the income. To pay for and incentivise my website manager, I told him I would split the AdSense revenue with him 50/50 every month.

Next, I will explain what I did that eventually led to doubling the cash flow from $1,000 to $2,000 a month from my miniature motorcycle forums…

Step 3: Test Ideas to Increase Income

The first change we made was placing the AdSense ad boxes in “hotter” areas in the design of the site. We used an AdSense Heatmap to strategically place the ads in the areas of the site where they were more likely to be clicked.

We also added an extra ad box into the design, since I felt it could handle one more ad without looking too crowded. I instructed my website manager to run some tests running different AdSense ad styles.

We kept things simple at first, changing the color of links and borders. I also asked him to do some research online to find out what AdSense ad designs were working well for other people so we had more things to test. After a month of testing we found a good combination of ad placement and ad design, and managed to grow the AdSense income to almost double across the two forums.

I instructed my website manager to set up direct advertising on the forums. This meant we would sell banners to paying advertisers for a monthly fee.

While AdSense is good, often you can make more money if you charge a monthly fee for a banner, and then sign up several sponsors. You never know until you try whether this will be more profitable, and in this case it was.

We used free ad management software to rotate banners and collect statistics about impressions and clicks. I asked my manager to search online for stores that sell products related to miniature motorcycles. He found several retailers who sold bikes and parts for the bikes, and emailed them all.We weren’t sure how much to charge per banner, so I decided to start on the higher end of my scale, and then lower the prices until we had enough sponsors.

I believe we started pricing at around $250/month for a banner in one of the prime areas of the site, and eventually found $150/month to be the sweet spot to get the most advertisers.

I didn’t want to take more than five paying sponsors at once to make sure they all received adequate exposure. Most of the time we had three active paying advertisers who stayed with us for many months. To make the banners fit into the design, we had to remove some of the AdSense ads.

Given with three or four paying advertisers we could make $500 to $600 a month from just one ad spot, that’s a lot more than we made from AdSense in just that area.

Plus we still received a good amount from AdSense in the other areas of the site. We also did one more monetization test. I suggested we look at Clickbank and see if there were any good affiliate products we could promote to the audience.

My website manager found an ebook on how to repair miniature motorcycles, which was a perfect test. We used one of the affiliate banners and tested it in on the site. For each sale, we earned about $15 commission, so if we could sell ten to twenty copies a month it would make us more than AdSense did. The ebook didn’t sell quite as well as hoped, but I liked how it looked on the site and since it did about as good as AdSense, we kept it running in rotation with AdSense.

Step 4: Maximize And Stablize Income

Although it took several months to find the right combination of monetization methods, ad placements and pricing structure, once we found a good mix we pretty much left it as is. Once we hit $2,000 a month in income I was happy with the result.

I ended up paying my website manager around $400 to $500 a month depending how well we did in AdSense income that month. This left me with about $1500 a month in cash-flow from my miniature motorcycle sites. Thanks to the increased cash-flow, within eight months I had recouped the $12,000 I invested and then had a $1500 a month passive income stream coming in.

As a recap, we used a combination of the following methods to increase the income from the forums:

  • Optimization of AdSense and adding more ad zones
  • Adding direct paying advertisers
  • Testing affiliate product offers

Thanks to the manager and the volunteer moderators on the forums, there wasn’t much work to keep them going. I did have more plans to expand the sites, including adding a blog and an email newsletter, which I will sell advertising and do affiliate promotions in. However none of this happened as I decided to sell the forums to raise some capital to buy a house of my own to live in.

Step 5: Selling Out for $25,000

To sell the sites I wrote out a prospectus document, which included information about the forums, such as:

  •  How the sites received traffic, including Google Analytics data and forum membership statistics
  • How much money each site makes and where the money came from, including reports from Paypal, Google AdSense and Clickbank
  • What role the manager performed and what role the new owner should plan to do
  • How to grow the sites in the future, costs to run the sites and more

I hoped the document would answer most of the questions a potential buyer would have. Although I planned to take the sites and sell them on Flippa, a friend had a contact who was looking to buy some sites, so I ended up doing the deal with him.

I sold the sites for $25,000, more than double what I paid for them and giving me a nice deposit for a house. I was very pleased with this website deal. Although it took quite a bit of testing to grow the income, by working with a website manager it made the job very hands off for me. I hope you take a few ideas from what I did to help you double your return on any websites you buy from Flippa, and turn them into passive income streams.

Competition!

Now I have to tell you about a special competition I am running in conjunction with the guys at Flippa where you can win one of three copies of my new guide package -

How To Buy And Sell Blogs And Websites For Passive Profits

How To Enter The Competition

To enter the competition and win one of three free copies of my new e-guide, all you have to do is leave a comment reply to this article telling me:

Why do you want to get into buying or selling websites?

With the help of the guys at Flippa I will choose the best three entries, who will win a free copy of the guide and the four bonuses that go with it.

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Comments

  • Spiro

    I want to get into buying and selling websites cause I like taking something that has potential value and increasing it for a profit. It’s just like private equity firms like Bain Capital that see value in perhaps distressed assets or assets that hold more promise if managed better in order to turn a profit, that is capitalism at it’s best! Maximizing the profit potential of a website is a fun challenge.

  • oanter

    It would be great to have passive income from a forum related to an area of expertise I have. I do have 6 figure income from btob commerce but I have to be actively involved in the business as selling the type of products I sell need expertise.

  • Chan Booyah

    I want to get into buying and selling websites because it’s better than buying and selling bat guano, as bat caves are becoming harder to find these days, and with hydroponic technological advances, weed growers just don’t need it anymore.

  • Jim Davis

    I want to get into buying and selling websites as I can see the parallel with brick and mortar real estate property development. You can start your property development company for much less when dealing in the virtual real estate of the internet but the process is the same: buy a property where you can see the potential for improvement, hire the expertise you need to complete the improvements then benefit from the income generated or resell to achieve a nice profit.

  • Joe Ammons

    I ‘m looking to get out of the rat race and make a decent income. I’m 61 so I no longer have the desire to move up the corporate ladder. I’ve been in IT for 30+ years as programmer, analyst and project manager. I’ve built and sold several WordPress sites on Flippa but did not make enough money to make a living. I have 4 aged domains with back links ready to build and will work on these during the coming weeks. Good info here in your article.

  • Steven Fry

    I have been buying domains for years. Always with big plans, I rarely have the time to put into learning how to build them up, and then selling them. I found this blog post very helpful. With a few dozen domains waiting to be sold, I think I will be reading here more often. When I do put the time in, I usually get a decent site made. I need the help I have found here to start making some money!

  • http://www.myonlinebusinessjourney.com/ Adriana Copaceanu

    I want to get into buying and selling websites because I love the creativity involved and I have an eye for detail. I know I can improve a site and give someone a site ready to profit from :)

  • frank

    very interesting article, but like most things the devil is in the details which i assume is disclosed in your book.

  • mbeth

    Hi, I was wondering what the traffic was like for those sites and what kind of quick due diligence you did before purchasing. I’ve been watching Flippa sites for some time but am finding it hard to discern between the good sites and the not so good ones. I found your post informative, and I’d like to know more, thanks.

    • yaro@blogmastermind.com

      I can’t remember exactly, but I believe one of the bike forums had about roughly 1,000 visitors a day, and another around 700. It was also important to see how many people posted to the forums each day. Again my memory isn’t perfect but I think there were at least 25 to 50 new posts per day when I bought the forums.

      My main due diligence was getting access to the analytics account, doing a thorough review of the site itself to see what kind of things people were talking about, where the advertisements where, and the usual things like looking up the way back machine, checking when the domain was first registered, checking where the backlinks were coming from, etc

      I hope that helps!

      Yaro

  • http://www.lostcyclist.me/ Quinton Hamp

    I really enjoy creating sites, getting them to rank, and seeing a passive income rolling.

    However, that is a long, slow process and I would be really intrigued to see what I could do to short-circuit the process and buy under-optimized sites and improve their business — and my money!!

    Great story. I would love to see what they do with it. Do they add an email list? Create their own clickbank product? Create an Ecommerce site that partners with their blog? The possibilities are endless.

    Thanks for the step-by-step look at your success!

  • Ron Meyer

    I have some niche web sites that I am looking into selling one or more of them. I also am looking for a sight for my wife to run that would also generate a monthly income.
    Ron M

  • http://nichesitestudy.com/ Aaron Goh

    Hey, thats a smart idea for Re-flipping websites. the 3 methods is really useful, i like how you hired a manager to redevelop your site. This takes most of the work out your hands. Seems like a great strategy, and you made $13000 just like that. Thanks for sharing!

  • http://keithmander.com/ Keith Mander

    I enjoy taking the real estate buy-and-sell flipping model into the digital age.

  • reuben

    Interesting read on what you have done. I am tired of working for other people and want to try and make a living working my own hours and reaping the benefit of my own work, where hopefully I can have a work and life balance. I have a young son, and due to my day job then I travel a lot. It would be nice to be able to work from home, and spend time with my family and also be able to take my kid to school. This is about freedom, this is about empowerment for me.

  • Marc

    Tim your checkout page is not working – I just tried ordering your ebook serveral times and kept getting errors.

    • timatflippa

      Hi Marc, that’s not us, but Yaro. I’ll let him know about the error!

    • yaro@blogmastermind.com

      Hi Marc,

      We’ve had a few people order in the last 12 hours. There was a glitch with pricing which impacted five people, but that has been fixed so it’s working fine now.

      I replied to your emails about this as well. I hope you have a chance to grab a copy of the guide before the price increase on Friday night.

      Yaro

  • Thoufeeq

    Creating, ranking and then selling those websites over and over for quick cash is to save money to buy an outstanding website, just like the one you mentioned here.

    A scalable business well packed in the form of a website is worth keeping and improving rather than selling it for cash even if its offered x30 the monthly income.

    • http://www.biologylabreport.com/ adam

      I wouldn’t have sold at 25k (or even 60k which is the x30 that Thoufeeq mentions). A sale price of one times annual earnings is far too low. You are able to buy at this price because of the high risk that the earnings are misrepresented and/or not achievable on an ongoing basis. But once you own a site and see the monthly income you’re mad to sell at that price. You could have waited a year to get the money to use as a deposit on a house. Or you could have taken a loan.

  • Bryan

    very very inspiring… :D

  • http://kid-lit-reviews.com/ Sue @ Kid Lit Reviews

    I would love a copy fo your book. We are starting a new venture in a new city. As a 501(c) fundraising is crucial. If I could learn to properly buy and sell websites, I could help fund the dog rescue. These dogs were minutes away from being put own simply because the pound needed space or it didn’t want the problem of black coated dogs, or because of lackof money. We have adopted out several great dogs and have 50 some more to adopt.
    this is n9t a profit generating business so we need a way to generate funds.
    flippa woud be the perfect place to make this money. Thanks

  • Marie Simo

    I like to get into buying and selling websites because you can transform a decent website with a good foundation ( with traffic and established visitors), improve various aspects of the site and then monetize them a lot better. It is like pimping up a website, lol!

  • http://TeeHunter.com/ Sergiu Poenaru

    How do you deal with transferring recurring revenue that comes into your paypal (when selling a property)? The new owner would most certainly want that recurring revenue on his own paypal.

  • Mike

    I want to buy and sell websites so that I can eventually get out of the 9-5 job and work from home

  • Vanessa

    I want to get better at building optimizing maintaining and selling webspaces So that I can establish a passive income that will allow me to work smart, not hard, provide for my family and make my money work for me through responsible investment..

  • Merry Strong

    I want to get into buying and selling websites to build up a retirement income. Unfortunately, I’m not getting any younger.

  • http://www.miscy.net/ Max Pen

    I’m not partaking in this competition. Just to comment that this article has been helpful to me.

  • 3js

    I would like to get into buying and selling websites as I can see the great potential of taking it from mediocre to great. I actually started a website from scratch and worked it up to 100 grand only to be locked out by my partner. Obviously, no partners this go around!I need to start over and I need your book so I do things right this time.

  • ciaobella34

    I’ve never done anything like it…but I think I will be good at it when I find the right one for me. I think it is a good way to make money online. No one has to know about it either…whatever I make is up to me. That has potential and is very exciting!