How to make money by buying sites with passive income

It has been an exciting April as I achieved one of the highest earnings so far in my IM career. Sorry for the lack of posting as I was so busy with starting new projects. I decided this month to slow it down a bit as I have enough on the plate for the entire year .

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I mentioned about site investing in my previous articles and I will talk more about it this time. However, I am still learning some of the nuts and bolts of buying sites so don’t take my word as the holy bible. It is just my learning points so far in this investment journey. I am sure there will be more in the coming months.

What to look for when buying a site for passive income

• Search traffic: I don’t invest in sites that have majority of their traffic from twitter, youtube and what’snot. I only look for sites that have at least 75% of their traffic from search. This is because search is passive and doesn’t require too much work unless you want to grow. One of the earlier site I bought was a social site and the things you need to do maintain the traffic is just too much work.

What keywords are driving the search traffic: It is not sufficient to just look for sites with good search traffic. Go down deeper to see what keywords are driving the traffic. Be aware of sites that used trend keywords such as events or news. These kind of sites will not have substainable search traffic once the trend dies off.

What you should do is to use a spreadsheet to analyse the top keywords the site is bringing in. See where the site is ranking for these keywords so that you know whether there is any upside to the site. For example, if a keyword is number 8 and is driving a few hundred people per month, you know that by bringing this keyword to the top 3, you can potentially enjoy a few thousands.

In addition, I go a layer deeper and see what big traffic keywords the site may be ranking for but is not showing in the analytics because they are buried in page 3 or 4. For example, a site might be ranking for cheap white ipad accessories. I will take a look to see if it is ranking for ‘white ipad accessories’ or even ‘ipad accessories’. If that site is ranking for these higher keywords, it will be a good push for me to buy the site as I can push these keywords to page one and enjoy.

• Source of backlinks: Check to see if the backlinks can be removed by the site owner. Certain site owners have multiple sites and they used these to support each other. It might be likely that if you buy such a site, the site owner might remove the links from their own network once the sale is completed. This will seriously pull the ranking of the keywords down and reduce the overall search traffic to the site.

• Check the history of the domain: Make sure the domain has not been used to do anything that Google might frown upon such as sex, gambling, drugs etc. You want to buy a site that has a clean history so that you have a good foundation to work on.

• Authority site: This is a personal preference. I like to buy sites that are recognised as authority. This means sites with indented listing such as this example http://www.google.com/search?q=keyword+academy&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-GB:official&client=firefox-a. I like authority sites because they are legitimate and are also easy to introduce new keywords to expand its potential.

• Diversified income streams: It is also a good practice to buy sites that have a different monetisation model. Rather than adsense, you can diversify your income base by buying sites that make money off affiliates such as Amazon or Commission Junction. I bought one recently that is selling software products and I have found that the margins are much much higher than what you will get for adsense.

Where to buy sites from

Most people tend to use flippa to buy sites but this is not where I have gotten the best deals. Hence, this will not be a post about how to buy sites from flippa. This is because there is too much competition and the good sites tend to have over valued prices. The best deals I have gotten come from private sources. This includes hanging out in forum as well as using innovative ways to find good sites. Below is one strategy I used.

I look at the sites listing in the buysellads site and contact those that have good authority but are charging about USD10-30 dollars for their ads. The lowly priced ads means the site owners are not making much money and you have a chance to buy them at a much better valuation than sites that are listed in flippa.

How much do pay for sites

The average norm for me is around 15-24 months range. I never have the luck to buy sites that can break even in 10-12 months. Fortunately, I was always able to push the ranking of the keyword higher than the original owners, which fastens my breakeven.

I find that for higher quality sites, they tend to command a much higher premium than the 10 times industry norm. I agree with such pricing because it is much difficult to build a site that brings in 500 per month than a site that brings in 100 or less a month. This scaling factor is where I think the premium is and is something I am willing to pay.

How to negotiate with site owners

When talking about the price, always stick to revenue as the basis for valuation. Don’t consider potential of the site or how much it cost the previous owner to build it. All these are irrelevant. You are buying the site for its current benefit, not for what it could be or to cover the expenses of the previous original. If you stick to this principle, then the negotiation will be much quicker and the results tend to be more favourable to you.

What are the logistics of site buying

After the deal has been agreed, there are a couple of things you need to do before the whole transaction is completed.

First you need to pay for the site. The most secure way is through an escrow service. It is not complex to use but you might some time to navigate it if you are doing it for the first time. The most irrating thing is that you need to go to the bank and wire transfer some funds from your bank account to the escrow account. Once that is done, the rest can be completed via an online platform.

Next, you need to receive the domain from the buyer. Depending on where the current domain name is registered, the process for domain transfer will be different. This is again a learning process but it is not difficult.

At the same time, you should start to move the site to your own hosting account. If neither the seller or yourself know how to do this, it is better to engage a technical person to do it. I have no technical skills what so ever and I always a freelancer to help me do it to prevent any mishaps from happening due to site transfer issues.

Once the site has been transferred to your hosting account and you have also received the domain names, remember to change the name servers on your domain to your new hosting account. If not, your domain will show a parking page rather the site. Do not drag this for too long as you never know whether Google will penalise the site for having no content and you can potentially lose all your rankings. To avoid this issue, it is always better to transfer the site first, then change the name servers once the content is up for hosting account.

That is all for site buying. I am sure I missed out some points. Please feel free to ask me questions via the comments.

What is next making money experiment

I also want to talk about a new experiment in my next post. I want to see how to make money with a general article directory site, rather than a site that is focus on a niche. There are reasons why I want to do this and I will outline them in more detail in my next post.

Thanks for reading and have fun in learning how to make money online.

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