The idea about what an investment is depends on who you ask and what areas they are involved in. For Wall Street types on the consumer end, investing is offering stocks, mutual funds and other retail investment products. For digital asset investors who buy and sell websites, apps, Amazon FBA, and other going concerns, it’s a whole different world out there.
Let’s look at whether you can make money buying and selling websites to understand the profit potential and investment capital required to get involved.
The Buying Side
For investors who are looking for a higher return, the often-touted 50 percent annual return is quite possible in digital assets like websites. Unlike other investments where high returns usually require locking up the investment capital for years at a time (venture capital), this isn’t the case with websites where they typically throw off copious amounts of cash-flow each month as return of capital.
As you can learn from the 4ra website which focuses on online properties, packages of sales leads and other interesting areas, most smaller websites are bought for between 25-36 months of earnings. This delivers a 33-48 percent annualized stream of earnings as long as the website continues to perform as it has prior to the sale and the information provided about the website was accurate.
Value-based Investing for Websites
One way to do well with investing in websites is to look for diamonds in the rough. By this we mean undervalued assets that haven’t been updated in some time with the owner perhaps willing to sell at an affordable price. Dated sites with a revised appearance, faster web hosting, a rebranding, and better monetization (ads, affiliate commission, pay per lead) can deliver improving revenues in short order. With a higher profitability, the site can be sold for a better price later.
The trick with investing in sites is to do your due diligence. For every worthwhile site, there’s a hundred that should be skipped. Patience is required to wait for the fat pitch and not swing the bat at every perceived opportunity.
The Selling Side
On the sell side, sites like Flippa.com and Empire Flippers provide marketplaces where websites are auctioned based on either the price the buyer is willing to pay or a multiple of the past earnings. Flippa is less well-managed and even allows sellers to delete public comments that they do not like by prospective buyers on their auctions which hardly makes the process transparent. Empire Flippers keep the websites confidential and only show their web addresses to verified parties who have put down a deposit. The fees vary with auction sites, but a cost of around 15 percent is commonplace.
What is attracting more investors to digital assets is the ability to generate superior income and total returns over a 2-3-year period. When buying astutely, it’s possible to secure a higher return than with retail investments like stocks and bonds. However, investors must be careful not to believe the lofty claims of sellers, verify all supposed facts for themselves (buyer beware), and preferably to develop an understanding about certain niches as a specialty to find those diamonds.
