Let’s talk about buying websites for passive income (and how it actually works)
How do you actually make money by buying websites for passive income?
Where do you even buy websites that can generate enough monthly income to replace your salary? What about the risks?
How much does a website cost and what’s the return? How long does it take to see a return on your investment?
Can you just sit back up and collect the passive income? Or do you have to spend a lot of time keeping it maintained? We’re going to cover all that and more in today’s video.
CLICK THE VIDEO BELOW to learn how buying websites for passive income works…
Matt Raad: Hi everyone. It’s Matt and Liz here, and today we want to talk to you about how buying websites for passive income works.
Liz Raad: Most people don’t even realize that this exists, or that you can actually do this. So, we want to go into a bit more detail about what’s involved, and answer some of the common questions that we get when someone first hears that, “Hey, we invest in these passive income websites.”
From Traditional Bricks and Mortar Businesses to Investing in Online Real Estate
The first question is, “Okay, what’s that? And how does that work?”
Matt: If you haven’t heard about us before, we invest in websites, we’re also Angel Investors, and we’re educators in this digital economy space. We specialize in teaching beginners (maybe like yourself), to getting online and replacing your income. In particular though, teaching people how to build up a portfolio of websites.
Liz: What we want to do today is just open your eyes to what’s possible out there. We want to show you some of the opportunities that are available, what we are doing, and also what our graduate students are doing.
Like Mark, who’s just recently hit a really big milestone in this. He started out with zero online technical knowledge. He’s been with us, and in just under a year Mark actually replaced his income and hit $10,000 a month from his website portfolio.
We want to show you how these people are doing that … So, it’s not just us making passive income online, it’s our graduates as well. How they’re doing that and how they’re using their skills as well to create full-time active incomes in the digital space.
How does investing online for passive income actually work?
So, let’s get into it. I think the first question is, how does this work? How do you actually make passive income out of this digital economy and websites etc.?
I think for most people, when they first get online they think, “Okay, I want to make some income online from home, using my computer on the internet”. The first thing they normally think of is e-commerce, i.e selling products online. Whether it’s through Shopify, or Amazon FBA, or starting a little online store, or Etsy etc.
Making Money Online without owning any Physical Products
Now, that is not what we do. It’s actually as far from what we do as possible, because we do not own any stock, we never sell or send a physical product, or handle refunds or returns. Because what we do is, we own and buy websites that provide information. In other words, we answer people’s questions. We help them make buying decisions. We give them good quality information. And then the monetization actually comes from advertisers, or us referring them through to people where they can buy a particular product.
Matt: You could think of it as an online billboard. It’s online real estate, but basically imagine a crowded retail street, and there’s all the Amazons and the Shopify’s selling all the products. And then here we are with our website (which is kind of like an online billboard), and we’re selling advertising space.
Liz: So, this is very leveraged strategy, and one that I think most people don’t realize is actually possible. We’ve been in this for the last 10, 12 years. It’s interesting because now we’re seeing these big corporate buyers come into this digital space because they’ve realized how powerful this model actually is.
Matt: Because one of the big things that they’re interested in is, we can get very targeted in our niches and in the traffic. So the big corporates are realizing, “Oh wow, there’s a really good website in, say, dog training.” It’s very specific. So, companies in the pet care industry may be interested in advertising on our dog training website. What it allows us to do is to go into a wide range of niches, and you don’t need to understand the niches.
Liz: Yes, we don’t need to understand the niche, and we’re going to explain how that works when we buy these websites.
Buying Website Assets to Fast-Track your Passive Income Results
Initially when we very first got online, we started like everyone else. We thought, “Okay, yes, we’ll build websites and we’ll do all that.” Very quickly (because I’m very impatient!), I said, “Okay, I don’t want to be building all the time. I want the results right now.” So, we started looking towards can we actually assets like websites that already have this advertising revenue or affiliate revenues, and just own them?
Matt: Our background is buying and selling traditional bricks-and-mortar businesses, and manufacturing and wholesale businesses that rely on lots of stock. So, I remember the day you looked over at me from the computer and said, “What the hell are we doing? Why don’t we just do what we did with our old strategy of buying and selling businesses? Or with what we do with real estate, but let’s just do it with websites”.
I think you can say now the cliche, “the rest is history”! It worked incredibly well for us. It was so much faster.
Where to Purchase Websites for Passive Income?
Liz: So, that takes us to the next question. Usually people ask, “Okay, where do you buy websites? How do you know where to even find them?”
Matt: Well, things have evolved. Over the decade that we’ve been doing this, when we first started we just had to buy sites off forums and by using the direct approach. We even purchased a website off eBay!
Liz: I don’t recommend that now, don’t do that.
Matt: These days you do not do that at all. The good news now is there’s online brokers (website brokers), who are very well-established in this space. And we strongly recommend you go and check them out, especially if you’re starting out.
That’s the easiest way, because there’s brokers out there who help manage the deal. The main ones that we recommend to our students to go to is:
Liz: There’s a whole range of them.
Matt: Right, there’s lots of other brokers out there, because this market has really grown. But for those people who started out a decade ago, they know their stuff, and they curate a lot of the deals.
Liz: That is interesting though. Because if you are first starting out, Flippa is probably the best place to start because it’s more like an auction-style site. You can buy websites from a couple of hundred dollars (even less), up to over a million dollars. So, there’s really nice range, and that is certainly something we would highly recommend.
Starting with small website purchases can help you generate bigger returns in the long run
If you want to get into this marketplace, this is the great thing. You can start small. You can start buying a couple of little website assets that are a few hundred dollars (under a thousand dollars), and that means you can get into the marketplace at very low investment risk to start. So, that’s definitely something we’d recommend.
Matt: To give you a quick example. Jasmine just started with a $320 website. She renovated it (fixed it up), and it started generating returns of $200 a month from the $300 investment. It was a great learning site, but what’s really cool is she sold it for $6,000 only 12 months later. That’s a perfect journey if you’re starting out on this.
“Buy a small site, learn how to renovate it or fix it up, and then sell it later on and roll the money into a much bigger deal.” – Matt Raad, eBusiness Institute
Purchasing and Renovating content-based websites to increase your investment leverage
Liz: That’s another really important point about this passive income website strategy. Where actually looking for very specific sites. We’re looking for sites that generate their income as passively as possible, and that’s why we pick things like advertising and affiliate revenues. Because when a sale is made, we don’t have to do anything.
Our main focus is just getting that content on there, that traffic, people visiting the website who are really interested in a specific topic. That gives us a lot of leverage.
The other thing is the strategy that we use, it’s very similar to a real estate strategy. We’re looking for these websites that need a bit of reno, they need a bit of love. There’s specific things that we do to websites to increase their profits and increase the amount of people finding them. It’s like finding those “diamonds-in-the-rough”.
Matt: I was just going to say in an ideal world, we find that those quick fixer-uppers just like you may have done with real estate renovations before. We’re looking for those websites where we can come in and do some really simple things, maybe a quick coat of paint and a bit of a tidy up.
So, initially we will need to do a bit of work to renovate it. Typically, one of the other things we do is change the monetization method on the sites. We get them working a lot better and we get them converting. But then, in terms of ongoing maintenance, we’re not working on a nine-to-five, are we?
Liz: No. Obviously we outsource a lot of the stuff that happens on our websites. But for our students though, we do recommend:
“When you first get started in buying and renovating passive websites, it’s important to understand how they work and what’s happening. That’s going to make you a far better investor, and a far better buyer.” – Liz Raad, eBusiness Institute
You’ll see the opportunities, you’ll identify the bargains, and you’ll be much better at doing your due diligence.
We cover all these things in our training. We’ve got a free training session, so if you wanted to learn a bit more about this, you can go and check that out. We go into a bit more detail about how this all works and what happens.
But basically what we’re doing at this point is the maintenance and the renovation. What we’re trying to do is get that website making as much return as possible.
How much do you make buying websites for passive income?
Liz: Another question that we often get asked is, “How much do you make out of these websites? How much do you buy them for?”
Matt: Well, for the good ones, it’s like a traditional bricks-and-mortar business. You’re making anywhere from 30% to 100%.
Liz: 30% to 100% return per year. You heard about Jasmine’s $300 website. The website (after renovation) was making $300 a month, actually. So, that one ended up being 100% return each month.
Matt: We also mentioned Mark earlier. One of the sites he bought was for $6,000. And now it makes $6,000 a month, and that’s profit. So, you can see that when you own a portfolio of these (which is the other big part of our strategy), you can quickly replace your income. It’s a really nice alternative perhaps to traditional real estate out there, as it can become a really nice portfolio.
Liz: We’re talking about high cashflow, and also, we’re risk averse. When we buy an asset, we want to pay that asset back to ourselves as quickly as possible. So, we get an asset that can generate ongoing cashflow and income for us.
Matt: What we should mention, is that when we’ve bought the site, we get in and do a renovation as quickly as possible. After that, it’s just ongoing maintenance (very similar to traditional bricks and mortar businesses). Then you sit on that asset for the next, hopefully 5 to 10 years. You don’t sell, and you just earn the income off it. It’s like earning rent.
Liz: Yes. This is a very specific strategy. It’s one that we’ve developed because of our background in buying and selling traditional businesses. We were professional business brokers, and we’ve worked in mergers and acquisitions and with private equity and venture capital. So, we are using a very strong and solid business strategy and investment strategy, but we’re applying it to this new digital world.
If you want to find out a bit more, you can do our free training. We’ve got lots of videos here on YouTube, where we explain how this all works and how you can get into the marketplace. We also show you how to pick the good deals and actually design your portfolio to suit what you want to achieve out of it.
Get started with your website buying journey
Over the years, we’ve bought and renovated a lot of different websites. Some websites are very simple to manage while others are much more complicated. So we put together this masterclass to show beginners the simplest way to get started. If you’d like to see real examples of websites we (and our students) have bought and sold – and how much they made, watch this video to learn more. We’re very excited to help you make the most out of your website buying experience.