Buying and selling websites for profit is such an intriguing investment area to be in. While “the old money” and traditional private equity companies still focus on selling and buying traditional, offline companies, the market about buying an online business is slowly getting traction.
Is it profitable to buy websites?
Why is it so lucrative to invest in websites? Let’s have a deeper look at valuations and your potential income when buying a website.
In the current market environment, it is not uncommon to buy an online business at approx. 30x it’s monthly profit.
If you buy a website for a monthly profit multiple of 30x (which is realistic, see below), keep it stable in regards to revenue and cost, it will return your investment in 2.5 years (30 months) – which equates to a 40% return per year. This is by far more then any index fund or even real estate would pay you.
But let’s look at it a bit more professionally: Centurica analyzed the market & the median SDE multiple. SDE stands for seller discretionary earnings. Simply put, it is an estimate of the total financial benefit a full-time owner-operator would get from the business per year. Here is a cool explainer video by Quiet Light Brokerage.
YOU CAN RECOUP YOUR INVESTMENT WITHIN APPROX. 2-3 YEARS! In other words, with the right skills and knowledge, you could effectively retire with 1/10th the amount of capital (as compared to index funds at 4% profit p.a.).
But, the market is slowly heating up:
All major business sector multiples have increased in 2019 due to continued strong demand from buyers and the limited number of sellers. – Centurica
In short, if you buy the right asset, keep or even grow it, it will pay back it’s initial investment quite nicely. This kind of business you are planning to do here is digital private equity.
Where can I buy an existing website?
Generally, I see three ways of how you can find a great website to buy and run as your own business:
- cold outreach to websites to buy (quite hard to do)
- using online marketplaces which unite buyers and sellers
- finding brokers who generate deal flow for you
The best marketplaces to sell and buy websites
I would recommend you to start with evaluating deals on the existing marketplaces. Brokers and cold outreach can make sense to, but only if you have enough budget as a (new) buyer or enough time to not be disappointed when people don’t back to your cold outreach.
The most popular one (especially when you only start as a new buyer is Flippa.com, but there are others:
And don’t get too excited yet. Start slowly, create your deal alerts and start monitoring the environment, defining your budget to buy a business, and wait on the sidelines until you feel really confident in analyzing online businesses.
Also, we don’t recommend entering the relatively new digital asset market environment from the perspective of flipping websites. Respectively buying and selling them quickly to make a profit.
We enjoy buying and growing them and potentially even enjoying the resulting benefits forever.
By the way, Ahrefs.com has made a fantastic video here on how to buy an undervalued website on Flippa:
Where can I sell an existing website?
Congratulations that you already have a website you plan to sell. This puts you in the place of only a few fortunate people these days as there are way more buyers than sellers in this new type of market.
We have made good experiences with the marketplaces mentioned above, but recommend you to do your research first. Are you unsure about your valuation or how to proceed? There are quite a few valuation methods out there, but we have analyzed the most popular one in our article about “how to value a website” here.
Do you need help or personal advice? Feel free to contact us here.
Ok, so what do I do next?
I recommend you to do two things right now:
- Sign up to my newsletter to get all free insights and alerts about great deals. Here we analyze current trends, deals entering the market, but also provide educational tips on how to do the right due diligence.
- Take this online course by Ryan Kulp to learn the basics. It’s good, not perfect – but a great way of starting your journey. I have taken it myself.