eBusiness Institute

Buying Websites for Passive Income

Buying Websites On Flippa For Passive Income [Our Top 3 Search Criteria]

If you’re a beginner thinking about buying websites on Flippa for passive income, you’ve come to the right place.

This beginner’s guide will show you:

  • How buying a website on Flippa works
  • How to find profitable websites under $1000
  • The 3 costly mistakes beginners make & how to avoid them
  • The exact search criteria we use on Flippa to buy profitable websites
  • Plus 5 more smart things you can do when using Flippa

With that, let’s jump in.

What is Flippa and how does buying a website on Flippa work?

Flippa is a fantastic marketplace for beginners who are getting started in buying, renovating, and selling websites.

That’s because Flippa offers a whole range of websites available, starting from $1, all the way up to millions of dollars.

And since there are a lot of websites on there for sale, with new listings coming on every day, that’s where we get our students to start out.

What kind of websites should beginners look for on Flippa?

For beginners looking to buy their first website on Flippa, we recommend looking at websites that are content-driven, monetised through advertising (Google Adsense), affiliate promotions (Amazon Affiliate program), or information products (ebooks and courses). And are established.

An established website would have at least a 6-month history of traffic and income.

Watch the video or read the transcript below to see the 3 types of searches we recommend all of our students use when they’re looking for profitable websites to buy on Flippa.

Liz Raad: Hi again, it’s Liz and Matt Raad, and today’s topic is a fun one! We’re going to look at the top three passive types of websites that you can buy on Flippa. These are the types of sites that we’re searching for when we want to add to our website portfolio. So, we want to cover those three things today.

Now, this is something that we go through with our students all the time. We teach beginners how to get onto website marketplaces like Flippa. There are some big marketplaces out there now that sell actual money-making websites. This is where you can go and buy these money-making websites, and we teach people how to do that the smart way.

So, we want to go in with a strategy and actually target the right type of websites. Matt and I are all about passive income, so we’re looking to purchase websites where you’re not just buying yourself another job. We want a site that’s going to give you some lifestyle and you can actually have it running in the background. These are the sites that will make you a nice side income stream without having to work on it every day single day.

Matt Raad: And I just want to say, I think it’s fantastic that Liz is going to talk to us about this topic today. Because anyone who knows Liz knows that she is the absolute legend of jumping onto Flippa live in front of hundreds of people in our community. Within just 10 minutes, Liz will go through this certain search format, and she can find a good half a dozen amazing websites.

We recently ran a webinar and we all had so much fun because Liz literally did this exact same search that we’re going to show you today. And in 10 minutes (live in front of an audience) she found a dozen sites, and out of that I’d say 6 of them were seriously good sites. So, no pressure, Liz….

Liz: No pressure!!

Matt: But what we want to do today is to share with you those three main searches to use when you’re looking to buy passive websites. This search is great if you’re a little more impatient. Personally, I’m a lot more methodical and I love searching for websites, so it takes me hours. But Liz’s method is a nice quick search. So, let’s get into it.

Liz: Yes, let’s find them…fast!

Search on Flippa Marketplace to Buy Websites

Use leading marketplaces such as Flippa to look for websites for sale

So, to start with, head over to www.flippa.com and have a look around. If you haven’t ever seen this website before, then definitely go over and check it out. Flippa is a marketplace like eBay where you can bid on sites, and there’s also classified ads.

You’ll see that Flippa has a nice new live updated search function, which is really good. So as you change the filters, you get to see the results coming up. And the first thing you want to do in your search is to go to the left-hand side. Here you can change what sort of websites you’re looking at buying.

3 Simple Searches for Buying Content Websites for Passive Income

Searching for Passive Websites on Flippa

Search #1 – Look for Content-Based Websites

Liz: For our strategy, which we think is the best and the simplest one, you want to select Content Websites.

Search for Content Websites on Flippa

Here, we’re looking for websites that answer questions and solve problems. And this is a really nice way to make money in life is by helping people. And that’s what we’re looking for – websites that are based around good quality content.

So you tick that box and we find we just have content sites. No E-commerce, no SaaS (software as a service), none of that stuff at this stage, especially if you’re beginning. We just want to start with content websites, nice and simple.

Matt: I’ll just add on to that, because we specialize in teaching beginners how to buy these websites. So I want to reiterate what Liz just said. When you get on the Flippa (or any other website markets), you’re going to find all styles of websites. When you’re starting out, start out with the simplest, which is content sites. With all the other types of websites, there’s a lot of complexity to it if you haven’t been online before.

Search #2 – Look at how the Websites are Monetized

Liz: The next thing that we’re looking for is a specific kind of monetization. This is the way the website makes money. The websites that we buy are ones that are monetized with either advertising or affiliate income.

Search for Websites Monetization on Flippa

Monetizing through Advertising Income

Liz: Monetizing a website through advertising income means that we’re getting paid for letting people advertise on our site. That means when someone comes to the website, advertisers put their advertising in front of the visitor. This can either be specifically around particular topics, or we use big blue-chip companies like Google (the Google AdSense program) to put advertising on the site.

This monetization method is pretty hands-off. All we have to do is put a bit of code on the website and Google fills in the rest. Google goes around tracking everyone and then decides what ads are best to show them. And then when someone clicks on one of those ads, we share in that advertising revenue with Google.

This is a great way of monetizing a website because when a sale is made, we never deal with the customer. It’s not like when you’re doing drop shipping or an e-commerce style website. For those types of websites, you’ve got to organize for product and refunds and returns etc. We don’t have to do any of that. And that’s the best way to be in online business if you want leverage.

Monetizing through Affiliate Income

Liz: The second method is affiliate income. Did you want to talk about affiliate income Matt?

Matt: The affiliate income model is very similar. Basically, we get a commission when someone buys off our affiliate link. When someone comes to our website and we’re talking about certain products (best chainsaws for example), the people who click on our affiliate link are cookied. This means that when they go to the product site (like Amazon etc.) and actually buy that product, we share in a commission.

Now, the great news is again, we can use one of the world’s biggest blue-chip companies (Amazon) to get our affiliate commissions. But we can also get affiliate commissions off a really wide range of providers out there.

You can get good commissions not just for reviewing certain products, but you can also get affiliate commissions for promoting services, specific businesses, or for promoting digital products such as e-books or online courses. This means when you get good at buying sites that are for affiliate commissions, there’s a whole world of opportunities out there for you. It’s very simple. And as Liz said earlier, we’re not holding any stock. All we’ve got to do is get someone to click over to a provider’s website.

Liz: Yes, this is very simple. And the other cool thing with the Amazon affiliate program is that you don’t just get paid for the product that you reviewed on your website. If they buy other items in the next 24 hours, you get a commission on those too. So a pretty cool system.

All right. So that’s the two monetizations that we look for is advertising and affiliate income. This is very leveraged, and very hands-off.

Search #3 – Look for Websites that are Established in Age

Searching for Established Websites for Sale on Flippa

Liz: The third thing that we want to look for is how old is the website? And also, how much profit does it make?

What we’re looking for is established websites. We’re not looking for starter sites, we’re looking for these established websites. They’ve been around for at least six months, so we know they’ve got some history. We know from our business brokering days, that’s something that adds incredible value to a business. The longer it’s been in business, the more likely it is to keep going, to keep earning those incomes. So the older the website, the better. Six months is great, a year is better.

Matt: A year is much better when you buy established websites and you’re getting started.

Liz: Even two or three years old is a great looking age in digital world, if you can find those websites.

Searching for Aged Websites on Flippa

You can actually change the filters on the Flippa search to only show websites that are six months old or more. You can also filter in terms of the dollars. So you can say, “Okay, I only want websites that are making at least a dollar a month in profit.” Or you could say at least $50 a month or $100 a month or $1,000 a month or $10,000 a month. So you’ve really got to choose your own adventure. And it depends on how much money you have to invest and, of course, where you are in your journey.

Matt: This depends on where you are in your journey and level of experience.

Liz: It’s good fun to go on Flippa and actually see the websites that are making thousands of dollars a month because that’s good proof. Like here’s all these websites that are making a heap of money.

But when you first starting out, we always recommend our students to start small, buying a website that’s under a $1,000. You can even buy a website for $200. Now, it might not be making much money (maybe couple of dollars a month), but it’s a great way to get in the marketplace really quickly and easily and for not much money.

Where to Learn More About Buying Passive Income Websites

So those are three things you should be looking for when you’re buying passive income websites on Flippa. Now, if you want to learn more, we’ve got a whole masterclass on our bigger picture strategies and why we pick certain websites, how we do due diligence, and what questions to ask before you buy that website. We also show the sites that we’re buying, and what our students are buying as well. Check out that masterclass training here.

You can do is check out our YouTube channel if you want to see the journey of other students and what they’re doing. You’ll see the huge range of people that are out there now buying websites and investing (and building) passive incomes for themselves.

The Top 3 Mistakes People Make when Buying Websites on Flippa

Let’s have a look at what those three mistakes are. We’ve been in this marketplace for almost 15 years, and teaching people how to do this for 10 of those years. So, we have a bit of experience in this area!

It takes a bit of experience and we see this happen all the time – especially, with our beginners. When people first get into the marketplace, we want to save people from making these mistakes.

Watch the video below

Mistake #1 – Not Having A Strategy When Buying Websites on Flippa

Liz: Big mistake number one is that a lot of people run in and jump on Flippa and go, “Yeah, I’m going to buy a website!” They have absolutely no strategy or thought about what they really want. So the big mistake here is going in with no strategy.

This is the same with any investment. If you were going to go into property investing, do you just throw half a million dollars in some random house? Would you throw a dart and say, “Yeah, I’ll chuck my money at that house over there.” But, you have no idea of what suburb that is. Is it a growth suburb? Do we need to invest near public transport? Or do we need to invest near the beach? What’s the best house for this particular area?

Determine your strategy BEFORE you start searching for websites to buy on Flippa

Liz: It’s that same sort of concept of investing. We need to figure out what’s our strategy here? What do we actually want? In a property strategy, you might say, “Well, do I want the higher returns of a commercial property? Or do I want more the more secure income of residential property?”

We need to think the same way in the website world, because there’s a lot of different websites that you can buy, and they all require different inputs. There are different levels of work and different levels of staff and different levels of experience needed as well.

TIP: Understand how the website works and makes its money…

Liz: One of the biggest mistakes we see beginners do is jump in and buy a website that they don’t really understand how to run. So of course, when the website’s running beautifully, it’s a really great investment. But when they get in there and don’t know what to do – it may not succeed the way that they’d hoped. They might then realize that it actually takes a lot more work to operate the site.

We teach our students that if you want to buy something, you need to understand the type of website that’s going to meet your needs. For example, if you want active income and want to be involved in the business – that’s one type of website. But if you want to be as passive as possible without a huge amount of time from your part, then that’s a different website buy again.

For Passive Income Online, focus on Content-Based Websites

Liz: That’s why Matt and I have always focused on content websites.

We know that there’s huge money to be made in eCommerce, and there’s huge money to be made in SaaS (software as a service), programming functionality etc. But I’ll quote Austin Powers here, “That’s not our bag baby!”

Yes, there’s multi-millions of dollars to be made in those systems if you get that right and take a good path (and add in a little bit of luck perhaps…). But there’s also a lot of money that you need to invest and a lot of time and it’s a different business structure.

“What we’re looking for is a portfolio of websites that can be managed by our team with as little input from us as possible.” – Liz Raad, eBusiness Institute

We’re the strategy. We guide the ship, but we don’t want to be down in the bows of the ship shovelling the coal in, if that makes sense. That’s why we have a very specific strategy about which websites we would choose to buy.

Shortcut your Success by learning from the mistakes Matt & Liz have already made when buying websites on Flippa…

Liz: Now, in another article, you’ll see our four biggest mistakes we’ve made when buying websites for profit. One of the biggest mistakes we made at one point in our journey was buying an app. It was hugely profitable, and incredibly high growth. But oh my goodness, it was a lot of work! It took a lot of management, a lot of coding, and a lot of updates to keep it running. And that just wasn’t our bag! So we ended up selling that.

So, it’s really important to go into this marketplace understanding what you want. You must have your strategy in place.

buying websites on flippa
Matt & Liz Raad teach their students how to avoid costly mistakes when buying websites on Flippa

Mistake #2 – Purchasing Big Websites Too Early In Your Online Investing Journey

Liz: The second biggest mistake that we see beginners make is that they go too big too soon. They hear about this marketplace, and they might already have a bit of money ready to invest. It could be tens of thousands of dollars, it could be hundreds of thousands of dollars, or it could even be a million plus.

They see the phenomenal returns that you can get in this marketplace and they just chuck their money in. They buy a website, and really don’t know how to run it:

  • They don’t have the systems in place.
  • They don’t have the team in place.
  • They really don’t understand the marketplace yet.

This can be a really big mistake.

Use the Website Due Diligence Checklist when Assessing How Much to Spend

Liz: When it comes to the due diligence process, if you go too big too quickly, you probably don’t yet understand all the questions you should really be asking when you buy a website.

We use a 17-page Due Diligence document. This provides us (and our students) with a list of questions, and important points that we always check off before we buy a website. For us – most of this checklist is now internalized. We can look at a website and within quite a short amount of time, and we can make an assessment of it.

But initially, when you don’t really know what to ask, that can be pretty tricky. So going in and spending tens of thousands or hundreds of thousands of dollars on a website when you really don’t know what’s going on is a dangerous move. So that’s one of the biggest mistakes and that’s something that we help a lot of our students with is learning that due diligence process.

Have a Portfolio Management Plan in Place – Diversify your Website Portfolio

Liz: The other important thing is understanding portfolio management. If you had $100,000 to invest into this marketplace, I would not be recommending to you to buy a $100,000 website. That’s just putting all your eggs in one basket. We’re very much into diversification.

Diversification of different places where your money is working for you:

  1. Diversification in niches.
  2. Diversification in monetization.

When your diversified, you’ve got whole range of websites, and a whole range of different income streams. This is what we find the most secure.

Now, maybe you don’t, but there’s all sorts of different strategies. Different strategies work for different people. But if you’re like us (and you value security), then I would suggest a portfolio strategy would be much smarter.

Going in too big on one big website, that’s higher risk than say 3 or 4 smaller websites that you can renovate and grow, and end up probably making the same amount of income anyway.

See how our students are diversifying their portfolio of websites for passive income online…

Liz: Actually, if you remember from our student success stories, you’ll see Mark’s story. He actually ended up investing $50,000 in buying websites for passive income and he’s grown that portfolio to be making $10-20,000 per month now. So from a $50,000 investment, he’s now got a portfolio worth probably upwards of $500,000.

By buying smart, Mark’s $50,000 investment covered 3 or 4 websites. I think that was a much smarter way to do it than trying to throw $50,000 at one big website. It certainly worked out for him.

Gain experience by keeping your first website purchase under $1,000…

Liz: So that’s mistake number two – just going too big too soon. It’s okay to start small. We get all our students to start off under a $1,000. Get in the marketplace, understand how this thing works, renovate a website, and see some results in the smaller scale.

You’ll find that the biggest scale is just a bigger version of that. It’s just more zeros. That means that you’ll have your team in place, your strategy in place, and you’ll understand how things work. So that’s a smart way to do it.

Website Due Diligence Checklist

Mistake #3 – Not Understanding Website Purchase Due Diligence when Buying Websites on Flippa

Liz: The third mistake (and I’ve touched on this just before, but I think it’s worth mentioning again), is not asking the right questions, and not understanding due diligence. For any investment that you make, you want to know what you’re getting into.

What due diligence is about is asking the right questions to make sure that investment is going to get you the return that you would like to get.

This is also our strategy about understanding, “Okay, can I renovate this asset? Can I add value to it? Can I make it worth more? Can I get it making more money?” Once we get the website asset, and it’s making more money – now it’s paying itself back to us faster.

Use the Website Due Diligence Checklist to know the right questions to ask

Liz: Ideally, if we can get a website to pay itself completely back to us within 12 months, that’s a really nice position to be. Once we’ve got our money back, we can now invest in another website. Then that website is there paying for itself. We can either use the money to pay for more content, to grow, feed it back into the website to grow it. Or we can take the cashflow, whichever way we’re strategizing for that website.

But to know that, you have to understand the questions to ask when you’re looking to buy these website assets. It’s like anything, if you going to buy a property or if you’re going to buy shares, there’s certain questions you need to ask before you buy them, or any business, of course.

Use the website due diligence checklist to identify potential red flags…

The due diligence process helps us to understand what are the things that are going to make the biggest difference here? What red flags do I need to watch out for? Sometimes there are simple little things that aren’t necessarily a a deal breaker, but it’s definitely something you need to ask the seller about.

A simple example of a red flag would be a large drop in traffic. That’s an obvious one, isn’t it? If suddenly if a website’s traffic is dropping (or just slow decline of traffic) you’d want to know about that. On the other hand (but equally just as important), a sharp rise in traffic is just as much of a red flag. We would want to know what made that rise happen, and am I going to be able to do that again? Or is that something that’s unsustainable? It’s going to go up here and I’m paying for it up here and then it’s going to drop back down again.

A lot of the time, it’s just about having a conversation with the seller about how they’ve built the site and what they’ve done (how they’ve structured it etc). Also, have they done any dodgy backlinking? It’s things like that we definitely want to find out about.

Website Buying Due Diligence helps you Determine the Level of Risk you’re willing to Accept

Liz: There’s certain things that you will start to identify when you know what you’re looking for. You’ll see certain things and think, “Okay, I’ve got to ask about that.”

In the end, due diligence is actually about figuring out the risk profile of this investment and figuring out, “Okay, the higher the risk, the less I’m going to want to pay for it.” That’s because, if you have to take higher risks, you don’t want to be spending as much money on it.

So due diligence is actually not about Yes or No. It’s about identifying, “What’s the level of risk of this investment? And how much am I willing to pay for it considering that level of risk for me?”

Knowing your own personal level of risk is important. There’s a lot of due diligence services popping up now. Yes, you can get the fundamentals of website due diligence from a broker etc. But what you really want to know is what’s that website worth to you for your own situation? Look at it from your level of expertise, who’s on your team and who you’ve got around you. Everybody’s valuation is going to be slightly different.

The biggest mistake beginners make is to jump into a deal without asking the questions that they need to ask. You need to do this just to make sure that the deal (i.e. what’s being said), is correct. Also, taking the time to see if this is the right deal for them at the right price.

Want to Learn More about Buying Websites on Flippa?

So, there you go. These are three things to be thinking about when you’re getting into buying websites on Flippa. That’s of course what we teach people. This is our passion. We love helping people understand this process. Using what we teach – you can get into a marketplace, understand the valuations and find yourself some really good deals. Then you’ll be able to renovate and keep cashflow or renovate and sell the website for profit.

If you want to see how that works, then have a look at the student success stories area of the Matt and Liz Raad YouTube channel. You’ll see some inspirational stories there. You’ll see how this works in practice and what people have achieved with it. And if you want to hear more of this content, make sure you subscribe. We’ll see you next time.

We also put together a free masterclass to show you how to buy and renovate websites for income and profit. You’ll learn our simple 3-step website investing strategy for buying websites with big profit potential and existing passive income, including examples of websites our students have bought and sold, along with how you can get started today if you’re brand new to building a passive income using websites. This Masterclass is for beginners who have no technical or website experience.

Click here to join or learn more about the free masterclass.

We hope this guide has helped you better understand how buying websites on Flippa works.

If you have any questions or topics that you’d like us to cover in the future, contact us here.

What did you think about this guide? Let us know in the comments.