Investing in Websites: The Complete Guide (2024)

Investing in websites (buying websites) is a growing trend for people seeking alternative investment opportunities to stocks, real estate, and other traditional investments.

While buying a website requires detailed due diligence and carries risk, it can be a lucrative and somewhat passive investment opportunity. However, before diving into this type of investment, it’s essential to understand the fundamentals.

In this article, we’ll cover everything you need to know about investing in websites—including the pros and cons, how to start, where to find the best opportunities, and how to make the right choice.

Why invest in websites?

Just like any other investment, investing in websites can provide a return on investment (ROI).

You can either “flip” a website for profit, reinvest in it to grow it further, and then sell it for a profit, or hold it long-term and use it for other purposes, such as driving traffic to another website.

“Passive” income potential

Websites can generate recurring “passive” income through monetization sources like affiliate marketing, subscriptions, and product sales. But don’t be fooled, not all websites are completely passive, and many will require investment into management to continue driving revenue.

Time and effort savings

Buying an established website is much easier than starting a website from scratch. While it’s certainly possible to start and build a website, you can save a lot of time and effort simply by purchasing one that is already profitable and provides an immediate return on investment. This way, you can focus on growing the business.

Scalability

Websites are scalable business opportunities. Through active investment into content marketing, social media growth, and expansion into other monetization opportunities, you can scale revenue and growth significantly, and with the right knowledge, you can build a website to a much higher level than the initial investment. 

Flexibility

As a digital asset, a website can easily be bought, grown, and sold again. Transfers of smaller sites are generally easy, which provides you, as an investor, a lot of flexibility with your digital asset, compared to a physical asset like a house, which could be harder to sell. Granted, large and complex sites are certainly more challenging to quickly buy and sell.

High ROI

Websites can potentially generate a high ROI. The ROI for each website depends on various factors, but there are plenty of cases where investing in websites, buying and selling, or buying, growing, and selling them provides higher annual returns upwards of 20%, 50%, or even 100%+ in some cases.

The potential downsides 

Just like any investment, there are plenty of potential downsides to consider when investing in websites.

Higher risk than other investments 

While the returns of investing in websites can beat traditional investments, websites can also be a risky venture, especially if you are inexperienced. A website can lose a lot of traffic within a short period due to factors like Google algorithm changes or affiliate partner fee changes.

Requires active management

Not all websites require management, but most do. In most cases, you need to actively monitor the site, publish new content, refresh old content, and fix bugs. A lot of these tasks can be outsourced, and systems can be put in place to improve efficiency, but website management will never be as passive as investing in the S&P 500.

Various aspects out of your control

The performance of a website relies heavily on many factors outside of your control. For example, an affiliate site might rely on Google, while an e-commerce store might rely on Shopify or social media for marketing. Changes to these platforms, which you can’t control, can significantly affect a website’s health.

Learning curve

If you are an experienced web developer, SEO expert, or marketer, there might not be as much of a learning curve. But if you don’t have experience and treat a website like a “set and forget” ETF, this will place a huge risk on the website’s stability if it’s not completely automated. It’s important to learn the basics before investing in and building up a website.

Potential scams

There are A LOT of scams out there, especially on platforms that don’t vet listings. Some unscrupulous sellers try to scam buyers daily, which is why thorough due diligence is essential when investing in sites. Never take someone’s word about traffic, backlinks, etc. Do the due diligence, always.

How to invest in websites in 5 steps

1. Research and identify profitable website niches

Investing in websites starts with research. The aim is to find profitable niches. Look for industries or topics with high demand, low competition, and potential for monetization.

Ideally, look for niches that are also increasing in demand. You can use SEO tools like Ahrefs or Semrush to look at the search volume of specific niches to validate viability. Tools like Exploding Topics help identify the trend of topics over time.

Keyword research will help you understand what people search for and what phrases they use when searching for specific information or products. This will give you a good foundation for selecting websites with strong organic growth potential.

2. Evaluate website quality and potential

Once you have found a specific website investment opportunity, it’s time to evaluate the quality of the website.

Assess factors like: 

  • Website design and user experience: Is the website fast, clean, and easy to use/navigate? 
  • Content quality: Is the content high quality, written by experts, factually accurate, and error-free? Is the content original, unique, and engaging?
  • SEO performance: Is the content ranking high in search engines for relevant phrases related to the website’s products? Is the traffic converting into sales?
  • Backlink profile: Does the website have a natural, diverse profile of backlinks, both dofollow, and nofollow, from credible sites that aren’t dodgy paid-for links?
  • Revenue streams: How is the website generating revenue (affiliate, advertising, products)? Are these revenue streams stable? Is revenue overreliant on specific revenue streams or diversified?

It’s important to carefully scrutinize various website quality factors to decide whether it’s worth buying.

Remember, certain “bad” aspects of it aren’t always bad. It depends. For example, as a web designer, a website with good content but bad design presents an opportunity for a quick win by re-designing the website.

3. Conduct due diligence and value the website

Before deciding on a website to invest in, conduct due diligence. 

Website due diligence involves validating the claims about the business. For example, how accurate are the organic search traffic, revenue, and profit figures? At this stage, you may be limited with the details you can access, but validate as much as possible. 

It helps to work with a professional due diligence service, provided by a broker, marketplace, or other M&A specialist to ensure it’s done correctly. 

To value a website, use a combination of website valuation methods such as earnings multiples, comparison sales, cash flow analysis, or asset valuations to determine a fair value. Similar to due diligence, it’s recommended to work with a professional. 

4. Negotiate and structure the deal

Once you find a website that meets your criteria, have done some due diligence, and have a valuation figure in mind,  it’s time to negotiate and structure a deal. This will generally involve working with the website owner/business broker to express interest and initiate discussions. 

As you speak with the owner/broker more, you may get access to further, more sensitive details not available to the public, which will require further due diligence to validate. 

For deal structure, each deal is unique. Some websites will sell for a fixed upfront price—typically smaller sites under $100k—while larger sites sold for $500k or $2m will likely have earnout provisions (an upfront fixed price, plus payouts based on contingencies being met). 

Also, consider the legal and tax consequences of the sale by consulting with an accountant or financial advisor to ensure you remain compliant and protect your interests. 

Work with a lawyer to draft a detailed purchase agreement that states the terms and conditions, including transfer of ownership, asset and website migration, intellectual property rights, non-compete clauses, etc.

5. Plan and implement growth strategies

After a successful acquisition, it’s time to implement a plan to grow the website.

Your goals after the acquisition might include:

  • Refreshing/improving current content on the website
  • Consolidating content pieces to reduce keyword cannibalization
  • Creating and publishing new content
  • Redesigning the website design, improving UX/UI
  • Renegotiating affiliate deals for more favorable terms
  • Diversifying revenue sources to reduce risk
  • Adding new monetization pathways to accelerate revenue growth
  • Cutting expenses to increase margins and drive profitable growth
  • Adding new technology to optimize systems and processes

These are just some of the improvements one could make to a website. The important thing is to have a clear plan and understanding of what needs to be done, why you’re doing it, and how to execute the changes. 

Also, knowing the purpose of buying the website is important. Are you making changes to simply flip the website and sell it ASAP? Do you want to grow it over the long term and keep it as an asset? Deciding this early will help you strategically plan what needs to be done after the sale.

What to look for when investing in a website

Revenue and profit

The two main financial metrics to look at are revenue and profit. What you should look for is revenue and profit that’s consistently increasing. Revenue and profit are the primary metrics likely used to value the website.

Revenue/profit includes sales from ads, affiliate marketing, and any other monetization method. Operating costs/expenses include marketing/paid advertising, hosting, software subscriptions, staff, warehousing, etc. 

Decreasing revenue/profit isn’t always bad as you might get the website for an undervalued valuation, and be able to re-accelerate its growth.

Growth potential 

Does the website have growth potential? Just like investing in a house, you want to ensure it’s in a neighborhood that’s appreciating in value. The same goes for a website. Is it in a niche that’s growing in popularity and isn’t subject to market changes that put the site at risk?

Look for growth opportunities for the website. Are there opportunities to cut expenses, e.g., by renegotiating supplier details or finding new affiliate marketing partnerships? Consider how you can grow the website before you purchase it so you’re not left with an asset that’s challenging to grow.

Risk assessment

Analyze the risk of the website by considering factors like the niche. Is the website in a YMYL niche (“your money your life” topics like medicine and law)? These subjects might be more sensitive to algorithm updates and require more investment in subject matter experts to create accurate, credible content.

Understand what you’re getting yourself into and make sure you have the resources to update and maintain the website. Don’t commit to something that’s past your risk tolerance.

Traffic and engagement

Low traffic isn’t always a red flag, as the numbers per se don’t mean much. It’s the value of traffic that matters most. However, very low traffic and engagement can be a red flag, especially for a website investment. 

Don’t solely rely on traffic numbers from third-party software like Ahrefs or Semrush. These tools are helpful, but make sure you gain access to Google Analytics and Google Search Console to understand the true traffic figures and how they correlate with conversions and sales. 

Financials and legal

The website owner should be happy to provide transparent financial details that you can scrutinize. Be cautious of an owner who is hiding any legal or financial issues surrounding the business, as you want to avoid being liable for anything post-sale. 

Ensure all agreements/contracts that you sign are accurate, safe, and protect you. A lawyer is a must for any sale. 

Where to invest in websites

For most people, even experienced website investors, finding and closing a website deal alone can be very time-consuming. 

Most buyers work with a business broker or website marketplace that helps with tedious tasks like due diligence, valuations, vetting, migration, etc.

Sure, they’ll take a percentage as commission, but to most people, it’s worth the peace of mind and predictable process, which is why these platforms/brokerages are so popular.

There are plenty of curated marketplaces where you can start your search to invest in websites, including:

1. Empire Flippers

Empire Flippers is the #1 curated marketplace for buying and selling online businesses. 

They have listings for affiliate, content, niche, and ecommerce websites. The marketplace has websites ranging in price from $25k to over $10 million.

Empire Flippers is an excellent place to find established, profitable websites across different niches. Empire Flippers also assists with due diligence and website migrations.

2. Website Closers

Website Closers is a reputable broker that sells online businesses, including websites.

They offer a personalized approach, working closely with buyers and sellers to facilitate safe transactions ranging from a few hundred thousand dollars to over $100 million.

Website Closers also provides comprehensive due diligence and supports website investors end-to-end through the buying process.

3. Flippa

Flippa is one of the largest online marketplaces for buying and selling websites. 

With a wide range of listings, including apps, SaaS, affiliate, and content websites, Flippa has thousands of website investment opportunities to browse.

Like other platforms, Flippa provides access to detailed metrics and analytics about each business. You can also pay for additional services, including due diligence.

4. Acquire.com

Acquire.com is a marketplace that has websites listed for sale (mostly SaaS, but other types too).

Acquire.com facilitates transactions within the platform by providing access to escrow services and legal support.

If you want to buy a software-related website, this marketplace is a great place to start. Note that an annual fee is required to unlock most website listing details. 

5. Boopos

Boopos is another marketplace to find websites for sale, including affiliate and blog sites, and more.

Boopos also offers financing for each of their listings, aggregating websites for sale from various marketplaces online.

The platform has a clean UI, allowing for easy browsing across various listings. Plus, they offer additional services like M&A advisory, website valuations, and more.

The bottom line

Investing in websites can be a great investment, but it’s not right for everyone.

With careful consideration of metrics like revenue, profit, growth potential, traffic, and your ability to improve and scale a website, investing in websites is an opportunity that can provide a much higher ROI than traditional investments.

However, it’s crucial to do proper due diligence to ensure that you don’t buy an overvalued website or get scammed, which, unfortunately, happens quite often.

Hopefully, this guide has been helpful and pointed you in the right direction!

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