There are two main strategies for website buyers: longer-term investing in websites and short-term flipping websites. Investing in websites means buying the website and holding it, continuously earning a monthly income while holding on to the website asset. Flipping websites means buying a website to modify and resell — hopefully for a quick profit.
In this article, we explore website flipping, and whether it is a good way to make money.
Table of Contents
- What is website flipping?
- How does a flipper find websites to buy?
- How does a website flipper increase the value of a site?
- Is flipping websites a good way to make money?
- Flipping websites doesn’t build wealth
- So is flipping websites a good way to make money?
- Key points
What is website flipping?
Have you ever watched a house flipping show on HGTV? Website flipping is a lot like that.
To flip a website, a flipper must find a website with untapped potential. This could mean a site that’s undermonetized (for example, relying on ads when it could make more money as an affiliate). Or it could mean a site that has recently been adversely affected by a Google update. Or it could mean a site that ranks well but has little content.
Once the flipper has identified a site with untapped potential, the flipper will purchase the website. This may occur on a marketplace like Flippa, or a broker, or contacting site owners directly.
The flipper will then spend a few months making the necessary modifications, and trying to increase the profit of the website. We will look at how exactly the flipper does that in a later section.
Once the flipper has sufficiently increased the profitability of the website, and thus the value of the website, he/she can turn around and sell the site. This usually occurs through a broker, since sale prices with brokers tend to be higher.
How does a flipper find websites to buy?
A flipper must be constantly looking for new websites to buy. This is actually much easier said than done.
The flipper may use traditional methods of finding sites, such as marketplaces or brokers. However, this can be difficult. Sites for sale on brokers are typically of top quality. Brokers will not list a site with defects. And most website sellers who work with brokers are savvy. If their site is undermonetized or can easily be improved, they will make the necessary improvements themselves.
Marketplaces for flipping websites
Since it’s rare for a broker to list a flippable website, flippers must generally look elsewhere. Marketplaces, such as Flippa, offer more opportunities for flippers.
Marketplaces don’t perform the thorough due diligence that brokers do — especially for low-priced assets. So they contain a lot of websites with flipping potential.
Flippa, for instance, often lists sites with defects. In certain case the defects can be corrected easily and quickly. These cases may make for lucrative flips. However, most of the time, sites with defects that are listed on Flippa cannot easily be rehabilitated, so they are useless to a website flipper.
There are a few other marketplaces like Investors’ Club, which offer more flippable options.
Yet even with these marketplaces it can still be difficult for a flipper to find sites to sell. So flippers must look elsewhere.
Buying websites directly from owners
Another tactic that flippers use is to buy websites directly from owners. This scouring the Internet for good options and then finding the contact email addresses for a website.
Once a flipper has found a good website, the flipper can contact the site owners and make an offer. This is a complicated process, but it yields the best deals. Since most of these owners don’t even know it’s possible to sell their websites, a flipper can offer a lower multiple.
I use this technique quite a bit and am a strong proponent of it for (at lest somewhat) experience buyers. But because there are a lot of caveats associated with buying direct, I don’t recommend it for novices.
For flippers, buying a website directly can mean the difference between a profitable flip and a dud. As an example, I have bought websites directly from owners for a 12x multiple (one year of income). In contrast, I have never spent less than 36x for a site from a broker. While I don’t consider myself a flipper, buying a site for 12x and selling it for 36x would yield a nice profit.
How does a website flipper increase the value of a site?
To increase the value of any business, you must either increase revenues or cut costs. But because websites tend to have minimal costs, a flipper must focus on increasing revenue.
How does the flipper increase revenue? Here are some common methods:
Fixing defects or penalties
One method a flipper may use to increase the value of a site is to fix defects or penalties.
Google is known for penalizing sites that don’t abide by its rules. Therefore, a flipper may buy a site with a fixable penalty and then fix it. For example, Google’s Chrome browser blocks ads on sites with what they deem “intrusive” ad experiences.
A flipper will buy such a site, with its ads being blocked, and modify the ad layout to conform to Google’s policies. After a review by Google, the site could instantly start earning more money and therefore be more valuable.
Another example of a defect is failing the Core Web Vitals tests. Core Web Vitals are Google’s measurement of whether your site loads quickly enough for users. If a site fails these tests, it won’t technically get “penalized,” but it will likely be ranked lower than other sites that pass.
A flipper may buy a failing site and modify the page layout or the WordPress configuration to ensure that the site passes. The site would then (hopefully) increase in the Google rankings and therefore get more traffic and more revenue.
Another technique a flipper may use is to improve monetization on a site.
Sometimes a site has good traffic and is in a valuable niche, but it’s only using a basic advertising provider like Google Adsense. A flipper may purchase such a site and then switch the ad provider to a more premium option, such as Adthrive or Mediavine. These two providers would instantly increase revenue over Adsense.
A flipper may also decide to add affiliates on such a site. For instance, a flipper may purchase a site about dogs that only uses ads. If the flipper adds an affiliate like Chewy, which pays high commission for signups, he instantly increases revenue significantly.
Other ways to improve monetization include making pages more affiliate friendly, changing the layout of a site to better show ads, and adding an e-commerce component to a site.
Growing the website
A flipper may try to grow a website to increase its value. He can accomplish this by adding content or SEO or by improving the content that is currently on the site.
This approach can take time, so its not the ideal approach for a flipper. Nevertheless, it is commonly used because most sites available don’t have a significant defect and are fully monetized.
To grow the website, a flipper can create a large amount of content. If the new content is good, Google will rank it based on the authority of the site in the niche. This will bring in additional traffic and thus revenue.
The flipper can also optimize the existing content and SEO. To do this, the flipper can build new backlinks and improve the existing content. Commonly used SEO techniques include making articles longer, adding more internal links, modifying titles and keywords, and adding images/videos.
Is flipping websites a good way to make money?
Flipping websites can be lucrative, but there are some major drawbacks.
Flipping websites is risky
The first problem with flipping website is that it’s very risky. If you only have a short window in which to dramatically increase the revenue of a site, you don’t have room for mistakes or bad luck.
If you buy a site and Google’s algorithm changes soon after (which happens a lot), your investment may be worth a lot less. And if you need to re-sell the site within 6 months, you don’t have time to recover from the algorithm change.
Google’s algorithm changes affect a large number of sites. Nevertheless, historically, unless you are using a black hat technique, when one algorithm change reduces traffic to your site, the next one may increase it. But if you don’t have time to wait, you are out of luck.
This is compounded by the fact that flippers sometimes take out loans in order to buy a site for flipping.
Flipping websites doesn’t build wealth
Like flipping houses, if you flip websites, each time you sell a site, you must start over. Yes, you may have some additional cash, but you don’t have any assets that build your wealth.
In contrast, if you invest in websites for the long-term, you will build wealth with each one you acquire. Investing in websites is a lot like owning rental property. You will continue to earn cash from the website until you want to sell it, at which time you will (hopefully) have a more valuable asset.
Over time, website sales multiples have tended to go up, which further increases the value of an investment website.
Flipping websites is difficult
It’s not easy to find websites that are easily flipped. As discussed earlier, websites that are good for flipping tend to be rare on marketplaces, and finding one to contact directly takes some time and effort.
On top of this, flipping requires you to have a good growth strategy that can be implemented over a very short period of time. It’s difficult to grow a website over a few months, and it’s even more difficult when you’re under a time constraint.
To do a successful flip, you need to be quick and not make any mistakes. This makes it a bad idea for first time website buyers.
So is flipping websites a good way to make money?
For the right person, it is. But I generally recommend avoiding it, due to the risks and the compressed time period.
If you’re considering flipping websites, do your research beforehand. You will need to have a good plan and the ability to execute quickly. You will also need some luck.
Flipping websites can be a good way to make money if you’re an experienced website buyer and can handle the risks. However, if you’re new to the industry, it’s better to consider long term investing, which is less risky and easier.