If you’re looking to learn more about buying websites for passive income, then this article is for you.
Watch the video and/or read the transcript on what the 3 mistakes to buying websites for passive income are and how you can avoid making these costly mistakes.
Liz Raad: Hi, it’s Liz and Matt with you again, and today what we’re going to look at is the top three mistakes that people make when they’re buying websites for passive income. So, I think it’s really interesting – we’ve worked with thousands of people (from small buyers all the way up to the big multi-million dollar deals) in going through this buying process. And we see some common mistakes that get made. So we want to share those with you, so hopefully you can avoid them.
Mistake #1 – Not Having A Strategy when Buying Websites For Passive Income
The number one top mistake is actually going in without a strategy. Now, I know that’s a big, broad thing, but it’s really interesting. If you don’t have a clear idea of what you’re looking for, what you want to get out of an asset (especially a business or a website asset, or even a piece of real estate if you were going to invest in real estate), then you’re going to probably buy something that maybe doesn’t give you the returns. Most importantly, doesn’t give you the lifestyle that you want.
I think that’s the biggest mistake we see.
“If you don’t have a really clear strategy about how you’re going to buy, what you’re going to do to it, and how you’re going to manage these assets, you basically end up with buying yourself a job.” – Liz Raad, eBusiness Institute
Matt Raad: And presumably the whole point of you getting into this game of owing a portfolio of passive income generating websites is that you can free up your life. They are hands-off to a large degree. And most importantly, they give you massive leverage on your time because you’re not having to work on them 9:00 until 5:00.
Now, that’s the idea and as Liz said, we have seen this. We’ve seen students come in and buy really good websites. But it’s interesting that they’re really just replacing their jobs with another job online. And you can do that, it’s great. You can make a lot of money and means you can work from home.
But ideally, if you have a strategy and a very clear view on the sorts of sites that you want to buy, then you are freeing up your life as well. That’s probably the biggest mistake we see.
Liz: Yes, so that’s if you want to buy websites for passive income. Now, we have lots of graduates and students who do actually want to make active income online, so that’s cool. If your strategy is to make active income, then fine. But if your strategy is passive income, then there’s a different style of site and there’s certainly a different type of deal that you want to target.
Matt: Well, I was also going to say, too, we mentioned at the beginning we’ve helped people buy sites from little tiny sites all the way up into the millions. Obviously when you get up into the millions (if you want to make a significant amount of money online), those sites will cost more and will take more effort generally. But at that stage you’ve got a team helping you anyway. The strategy is still greatly leveraged.
Liz: So. That’s mistake number one. I think that’s really important to recognize, that you need a strategy, you need a really clear vision and goal going in, before you go and start looking at websites to buy.
Mistake #2 – Not Asking the Right Questions when Buying Passive Websites for Passive Income
Mistake number 2 is a big one and we see this a lot.
Matt: Yes, this is my favourite, and the one I love teaching our students on the most because this is our passion. The mistake is not asking the right questions when you go in to buy these websites, and not understanding the due diligence process. And we see beginners make this as a mistake all the time.
Liz: Yes, and we make this mistake in the very first business we ever bought. This is why we’re so passionate about it. When we started, we didn’t know what we were doing. We were students ourselves getting into our very first business many, many years ago.
Matt: It wasn’t an online business. It was a traditional bricks and mortar manufacturing business. And we were given all this advice about how much it’s worth, and it was completely wrong.
Liz: And there were certain questions that we should have asked before we invested in that business. Now, we were determined enough to turn it around, we just said, “Right, well we’ve got to do something now”. So, we turned it around and ended up making a lot out of that business.
But what it did ignite in us was a passion to learn, “Okay, we really need to understand how to do due diligence”. Understanding due diligence allows us to recognize good opportunities. That’s how we find the diamonds in the rough – by understanding that due diligence process, and the sort of questions we need to ask a seller before we buy.
This process highlights the red flags, so it saves us from buying deals that aren’t good. But it also shows us the opportunities. There are a lot of times we’ve found when we’ve bought websites, where the owner thought something was a massive problem. But we were actually thinking, “This is the best opportunity ever!”
So, that’s why asking the right questions and really getting good insights into the website before you buy will not only save you a whole lot of money (and save you from investing in something that’s not a great deal), but it will also highlight to you where the huge opportunities and bargains are in the marketplace.
That’s a really important one. I think knowing due diligence and understanding what questions to ask will make you a lot of money, and it’s a really rare skill. Not many people know how to do this, and the rarer a skill is, the more highly paid it is. And this is definitely the case with due diligence.
“One of the most valuable skills that you can learn over the next decade, is how to do due diligence on digital assets.” – Matt Raad, eBusiness Institute
Matt: We can see this is a digital economy now. This is where there’s tonnes of money, and like Liz said, it’s a highly paid skill if you know how to do this. You can make money for yourself and your family at any time. It’s kind of like the magic skill.
Imagine being able to look at a website and go, “Wow, that’s a really good opportunity. I can get that for $50,000 or $10,000. I can fix it up and I can make that money back within a year or six months etc. And I can get regular, ongoing income off it”. That’s the sort of skill you want for the future.
And these assets are going up in value, so understanding that is really powerful.
Mistake #3 – Not Understanding How to Renovate Websites for Passive Income
So, this brings us to the top mistake number three, which is understanding how to renovate these websites. Again – we need to have that overall strategy. We need to understand how to do due diligence, (that’s a big mistake people don’t take the time to learn that process properly). But hand-in-hand with that is knowing how to renovate a website. Knowing what to do with it.
How are you going to fix up your $50,000 website so it doubles its income, and you can then sell it out hopefully one day for millions of dollars? Obviously, that comes back down to knowledge. You can see that we’re obviously biased! We’re very passionate and we teach people how to renovate passive websites for income. But we know what it takes to make a massive difference.
You need to have that knowledge of looking at a website, and understanding:
- First and foremost, what are the quick wins here?
- How can we renovate it?
- What are the absolute musts that we need to do to tidy this up?
- Can I do it myself?
- Do I need to get my team in there?
But at the end of the day, it all comes down to your knowledge level of understanding how these websites work, and how you’re going to fix them up.
How we Doubled Our Money in A Couple of Hours…
Liz: They’re the little trigger points, those little knobs on the dial that you turn that make a massive difference to the outcome. So again, it’s coming back to this idea of leverage and creating passive income. We like to call these things: Maximum Return Activities – those little things that you can tweak which makes a huge difference.
To give you an example, we had a website where we did the due diligence process, and we could see there was this huge opportunity. There were a lot of people coming to this site but seeing pages where there was no offer. There was no advertising, there was nothing on there. As soon as we bought it, we spent a couple of hours job fixing that problem, and the income almost doubled within hours.
Liz: This is the kind of leverage we’re talking about. And I think that’s something that really important going forward, if you want to leverage your life, if you want to get passive income, you have to understand how to use your time to do small things that get big results. That’s what we do. That’s what we love teaching people how to do.
If you’re going to go and have a look at some websites, just keep that in mind. Go in with a really clear strategy thinking, “Okay, what do I want out of this and what do I want to create in my life? Do I want active income? Do I want passive income? How do I want this to work?”
Here’s the Top 3 Things We Recommend to Make More Passive Income Online
So, the 3 things we did to double our income on this website were:
- Understand what our MRA’s were.
- Understand how the website worked, and were the opportunities are.
- Understanding how to take advantage of it, and what we needed to do to make that happen.
So, if you want to learn a bit more about that, we do a lot of training obviously.
You can do our free training – we’ve got lots of videos on YouTube all about buying websites for passive income. So, explore around. This is a marketplace that is booming and growing right now, as you can probably feel. We’re seeing a huge shift into the digital economy, so it’s definitely the place to be.
Matt: Just remember one of the best money-making skills you can learn over the next decade is how to do website due diligence, understanding how they work, and understanding how you can renovate them.
If you’re interested in that sort of thing, check out some of our free training on website investing where you’ll learn how to safely start buying and renovating websites for passive income.