Is Buying a Website a Good Investment? Life changing decision


I’ve owned websites for years, and sure, I’ve had ups and some downs. But I’ve never regretted owning a website, it’s a fantastic way to make a living, and it changed the course of my life completely. 

Buying a website is a fantastic investment, so long as a buyer understands the related industry or niches the website occupies, they buy from a verified broker, and the website is free from Google penalties.

In this post, we’ll cover how I became a website owner. You’ll also learn about many of the opportunities of website ownership, and we’ll look at some of the downsides too. 

In addition, we’ll look at:

  • How you can earn an income from a website
  • The returns you can expect to earn from a website
  • What to look for when buying a website
Dog-with-his-own-website

Website Ownership Advantages

Websites come in many different guises. A business website, personal website, forums type sites, product comparisons sites, etc. In general, websites fill some sort of information gap.

My sites, for example, fill a need for mechanical information. The demand for reliable, clear information on all topics is massive and growing as more and more people trust quality websites.

While once you need to visit a professional and pay a fee to get clear answers, that’s changing. Websites that specialize gain the trust of Google and their readers, and that helps propel a website’s reach.

Website opportunities are abundant. I started my website journey about five years ago. I had no intention of being in the website business; it was all a happy accident. I owned a seasonal small engine repair business that was super busy in summer, and to help my customers out, I thought I’d build a small website offering information on those common small engine complaints.

I found to my surprise, that my website was attracting readers from all over the globe. I was amazed at how far my small website could reach and how it could actually make money passively.

By the second season, my small but growing website was making money, and by the third season, it was making more money than my repair business.

I was now a website owner and developer.

Just some of the advantages website owners enjoy include:

  • Work when you want
  • Work from where you want
  • Earn money passively
  • Ability to sell your website
  • Ability to scale up your business with virtual assistants and hired writers

Website Ownership Disadvantages

It’s not all gravy; while you can make a great living from a website, fortune can change quickly; a website’s income is generally tied to the volume of traffic it receives from search engines.

And when I say search engines, I really mean Google. The problem is Google likes to shake things up. Meaning your site’s page rankings (where they appear in search results) may get shuffled with any one of google’s regular algorithm updates.

Google makes minor changes to their algorithm all the time and rolls out two major shake-ups twice per year, one in January and June, and they can hurt your traffic.

How much can it hurt? A 25% cut in traffic is the worst I’ve experienced. That said, generally, most traffic comes back over the following couple of months.

But the reshuffle hurts your traffic and your income proportionally.

Anyhow here are a few other disadvantages; most are more of an inconvenience than an actual disadvantage. 

  • Technical issues 
  • Managing writers
  • Plagiarism
  • Focus

Technical issues

From time to time, problems will arise with your website. It can be as simple to solve as an expired SSL cert or a little more complex like a Plug-in software clash.

That said, don’t let this put you off the idea of ownership, I have only basic technical knowledge, and I’ve had no problem solving these types of issues. 

Problem-solving, after all, is the business we are in, and if we can’t do it for ourselves, then we may be in the wrong business. A good host provider is a massive help too. The better Host providers charge a little extra but have a whole team of tech-savvy problem solvers at your disposal.

I like to try and solve it myself first; that way, I learn something, but I know they have my back if I can’t nail it.

Managing writers

When building a website, you’ll need content. Initially, you’ll be writing all the content yourself. But as you grow, you may wish to outsource some of the content writing.

There are a ton of great places to find writers who will write a killer article for a set fee. That said, you’ll have to weed through a ton of crap writers first. This process can be irritating as some writers are just poor quality, others may use AI-generated content, which is spun content, and others may simply copy content from other sites.

Buying content is a viable option, but building a team you trust takes time and effort.

Plagiarism

This is the scourge of the internet. Yep, fly-by-night operators simply right-click on your content, copy and paste your to their website, and hit publish. That’s how easy it is, and it’s a real pain in the ass. 

It’s always been a problem, but it does seem to be getting worse. Google isn’t going to be a ton of help here. It’s up to you, the website owner, to find and have your copied content taken down. As your site grows, the plagiarism police workload grows too.

Focus

I find it increasingly difficult to focus. The more I learn about websites and the digital landscape in general, the more opportunities I see for other businesses. Don’t underestimate how attractive the next new idea is.

I battle with this all the time. You might say, “that’s not a disadvantage of website ownership.”

But with so many opportunities around, it can be hard to focus all your energy on the task at hand. There’s a real danger of spreading your resources too thinly.

How to Earn Income From a Website

There are many types of websites, so too are there many ways a website can earn money. I won’t cover every possible way a website can earn money, but I will cover the most common ways, and here they are:

Advertising income – Advertising income is the easiest form of income a website can earn, and the best part, it’s totally passive. When your site has significant traffic (30k per month +), you’ll be accepted by the larger, better, paying ad brokers.

Affiliate income

Affiliate income is passive income earned by recommending useful products to your readers and offering a link to the product. The product is sold and shipped by a third party such as Amazon, and you receive a percentage of the sale price.

Subscription

Offering a subscription to your site is a very popular way to generate income. Readers pay per month to access premium content or tools etc. While this type of income can be significant, it tends to be time-consuming and not a passive way to earn.

Product sales

Direct product or service sales. This type of website is the least passive and very hands-on. It suits an owner already in the business of selling products or services since this type of site will have to process the payments and ship the goods and services.

That said, there are a ton of companies out there that specialize in payment processing and shipping, including the giant Amazon.com.

What Returns Do Websites Offer

Starting a website is a wonderful way to build a business. Consider for a moment the biggest single barrier to starting a new business – Capital. It takes a ton of money to start a bricks-and-mortar business. 

Let’s just consider the differences between starting something as simple as a coffee shop compared to a website all about coffee.

Annual setup costs associated with starting a modest brick-and-mortar coffee shop includes the following:

  • Rent a building for $15,000 (Annual)
  • Legal fees $1,000
  • Building taxes $2,000 (Annual)
  • Power $10,000 (Annual)
  • Phone $1,000 (Annual)
  • Repairs $2,000 (Annual)
  • Equipment $15,000
  • Furniture & fittings $5,000
  • Advertising $4,000 (Annual)
  • Staff (2) $50,000 (Annual)

Setup & annual running costs associated with starting a coffee website include:

  • Domain name $30 (Annual)
  • Host provider $250 (Annual)
  • Website theme builder $100 (Annual)
  • Power $200 (Annual)
  • Furniture $250
  • Laptop $800

Yep, that’s it. It’s a short list?

The barriers to entry are small, and that’s exactly what makes a website a great business to buy or build.

Expect to pay between 35 and 50 times the monthly net income or 3 to 4 times the annual net income. (payback period)

That means even a modest site earning five thousand dollars net a month will have a ticket price of 175 – 250k.

Buying such a site on the face of it represents a good deal; remember, a good site will keep growing after purchase. This means the five thousand a month net figure will keep growing; the faster it grows, the shorter your payback period will be.

Ok, so let’s run the numbers; what type of return can we expect? Let’s make some assumptions, and we’ll run two scenarios – a worst-case scenario and a best-case scenario, and likely, you’ll fall in the middle somewhere.

OK, still with me? Good! We’ll make the worst case first.

Worst case scenario

For the sake of running the worst-case scenario, let’s assume you buy a website returning 5k net a month, and you pay top dollar for it, $250k.

Let’s assume the content of the site is solid, but as it’s mature content, it doesn’t grow the revenue any, and you decided not to add any additional content.

That said, the rate of return looks like this – $5k per month by 12 months equals $60k per year.

So what’s the return after one year of ownership? Revenue of $60k represents a return of 24% on $250k.

Not a bad return and this is the worst-case scenario.

Ok, now for the best-case scenario

For the sake of running the best-case scenario, let’s assume you buy a website returning 5k net a month, and you pay top dollar for it, $250k.

Let’s assume the content of the site is solid, but as it hasn’t matured yet, it continues to grow and add revenue.

With that in mind, even a modest growth rate (20%) by the existing content would add an additional $12k revenue by year-end.

Let’s also assume you decide to add additional content on an ongoing basis (something modest like three posts a week), remembering content takes approximately nine months to mature.

This would add an additional 156 posts, thirty six of which would be mature revenue-yielding posts by year-end and could add an additional $3k for a total of $75k.

(Remember, every month that passes, more of the 156 posts (and growing) are adding to your monthly revenue)

So what’s the return after one year of ownership? Revenue of $75k represents a return of 30% on $250k.

Nice work!

These figures don’t include personal income tax deductions. They don’t make an allowance for buying additional content either, which could cost in the region of $100 per post.

What I Look for in a Website

I build my own websites. However, I have bought two, and here’s what I’ve found useful when shopping for a website. 

  • Industry/subject knowledge – There are all types of personal websites. In my opinion, a newbie website owner should at least understand the industry their website covers.
  • Steady growth – I like websites that show an initial vertical growth path followed by a steady increase over time. Sudden spikes in traffic are suspicious unless there’s a good reason.
  • Avoid PBN – In particular, buyers must be aware of traffic spikes or private blog networks, which will lead to a Google penalty.
  • Hobby niche – I like websites in the Hobby niche.
  • Evergreen content – Websites where the content remains evergreen, as opposed to tech-type info, which tends to go stale pretty quickly.

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John Cunningham

John is a writer, classic car and whiskey lover, men's shopping enthusiast and self appointed DIY expert. His greatest passion is repairing in the workshop, making old classics look and run like new again!

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