A Guest Post by Thomas Smale

One of the most lucrative and often overlooked strategies to be a profitable site flipper is website arbitrage. In very simple terms, we are buying an established website for a good price, adding value and then selling for a premium. The concept is simple, but in reality, it can be a lot more complicated than it sounds.

This model is extremely attractive for several reasons, such as it can generate profit in the short term, and you don’t have to put your money ‘on hold’ for months. This potentially allows those on tight budgets to sell several websites every month, as well as the fact that by selling a website quickly, you minimize the risk of the value of the site decreasing (the site losing a bunch of its traffic to a competitor, the market trends changing etc.).

Flipping Websites checklistWhen looking for a site to “quick flip” there are a number of important factors to consider. At all stages in the process you need to be thinking: how can I add value? This is an essential element in the process to ensure you achieve a premium on a marketplace such as Flippa.

Generally speaking, you want to look for sites that are performing under-potential and are being sold under-valued. Try searching webmaster forums for sites to buy or even contacting website owners directly. The key here is time: it is important to act fast and have the site up for sale quickly.

A good way to evaluate a site before buying is using a checklist. Each person will have their own individual way of pre-sale evaluation, but here is a checklist I use as guideline for “quick flips”:

  1. Does your website due diligence come back positive?
  2. Can you raise funds for the purchase?
    • Can you pay the seller late? (This gives you chance to sell it before you pay – true arbitrage.)
  3. Are statistics transparent enough for resell?
  4. Do you have sufficient knowledge to answer questions about the niche/technology used?
  5. Is the site under market value?
  6. Will the site retain value after purchase (e.g. avoid personal blogs)?
  7. Can ownership of all assets be transferred quickly?
  8. Would the site appeal to your previous list of buyers (if you have one)?
  9. Are you aware of your break-even point for the site?
    • Will your list pay you more than you will have to pay?
  10. Can you add value in 1 day?
    • Can you improve the design in one day?
    • Can you improve the content in one day?
    • Can you improve monetization in one day?

There are a number of other factors you may also wish to consider. The checklist above is looking at moving fast and requires a basic understanding of due diligence and ability to value a website fairly.

Obviously, a number of the above factors depend on your own skills. When evaluating a site to buy, you need to identify areas where you can add value. There are few people that can do everything, so as such, it is important to understand your strengths and skills in order to select the perfect site.

A number of people tell me they can’t flip sites because they can’t do design work or add plug-ins to a WordPress blog. This is rubbish! I could barely tell you the difference between Photoshop and Paint, and find words such as “vector” confusing! I’m not saying that being a kick-ass designer is going to hold you back – but there is always something for someone.

This all leads back to the “adding value” stage. Once you’ve identified your strengths (or your team’s strengths if you are lucky enough to have one) then you can get to work.

Great designer? Buy an established site with a horrible design – you’ll then add value by making it look better.

Great writer but can’t design? Buy a nice looking site that lacks content. Add content and you’re good to go.

Eye for a bargain? Buy anything and sell it for more with an awesome sales copy!

AdSense pro? Buy sites with poorly optimised ad placements – you can often make huge improvements to CTR (click through rates) with some small tweaks or a new theme.

Can do more than one of the above? Great – you’ll be an awesome established site flipper!

This is by no means an exhaustive list, there are so many different websites out there leaving potential for EVERYONE to be able to buy a site and add value in some way.

Quality sites have, and always will sell well on Flippa, or anywhere for that matter. Arguably, in recent times, those who focus their business model on “turnkey flipping” have begun to see sales drop – this is where the beauty of this strategy comes in. You are selling quality, established sites – buyers get a good deal, you make a nice profit and everyone is happy. And that, as I teach all of my students, is the key to building a sustainable business flipping sites: buy quality, established sites; add value; sell.

Happy customers = returning customers. Returning customers = profit.

About Thomas

Thomas Smale is an experienced site flipper who has been in the business for over two years. Earlier this week, Thomas released a brand new Site Flipping eCourse called Killer Flipping Secrets.

Thomas is offering a 20% introductory discount, and a $20 Flippa.com Voucher to help you get your first auction up, should you decide to order Killer Flipping Secrets and join Thomas’ hyperactive Private Forum (included in the deal).

Find out more at Killer Flipping Secrets and use the discount code “FLIPPA” when ordering to get your package of goodies.