Flip Strategy #2 – Buy and flip “as is”

July 25th, 2010

Don’t like feel like doing fix-up work? Consider selling the property “as is.”

If you’re able to find an exceptional value, this may be the route for you and it’s especially true if you’re able to locate a hot-topic website or where the owner is in a “must sell” situation.

When I was writing this post, I placed a post on one of favorite forums asking if others had utilized this strategy. One forum member privately contacted me to say “yes.” The only concern was that he did not want me to identify him publicly but here’s what he said.

“The deals to be had are unbelievable compared to other investments such as a standard savings account. The main way I made and still make money is to buy under-valued websites and sell them on other marketplaces. It takes a little more time but in the end I usually make between 30-50 percent profit by simply selling the site almost the same as I purchased it. If I need to, I simply hire a freelance programmer to do minor work which is still cheaper than having a regular staff. In the end, this is a great way to make money.”

When asked what his number one secret was to his success, he stated it was two critical factors. The first being a site which sold way undervalued and equally important was the “sale description” in the marketplace advertisement.

Flipper’s Tip: If you buy a website, it’s advisable not to use the same marketplace that you bought the website to resell the site.

While I wish I could reveal this individual, he is thoroughly convinced that flipping websites “as is” is one of the easiest methods of generating a positive cash flow.

Website Flipping Strategy – Fix and Flip

July 1st, 2010

The most common strategy of website flipping is Fix and Flip. This involves buying a website which needs simple improvements then selling it for a nice profit. Like any other website purchase, the key is to buy it at a price which is much lower than market value then sell it for a profit.

To make this strategy effective, you need to know exactly what it will take to get the website in “sale-able” condition. For example, you see an underperforming website which lacks obvious elements all websites should possess such as meta tags, site map, backlinks, etc

In other words, basic Search Engine Optimization (SEO) programming which could be easily improved. Another situation would be a website that has quality content but the presentation is poor. Both examples would be a good situation where you could take a website needing some tender loving care, fixing up the site then selling it for a profit.

A buyer can quickly identify these deficit features and within a few days incorporate them and then post the website back up for sale. This Fix and Flip strategy is a tried-and-true method and works very well. You can easily make a decent profit on one deal, depending on your market, how good you are at finding bargains and the quality of your sales presentation.

The possible challenge with fix and flips is either paying too much or underestimating repairs. Be realistic in your improvement costs and length of time it may take to resell. This is where being a seasoned webmaster/internet  developer can be to your advantage because it doesn’t take much to sort out the bargains that are available. And if you don’t desire to fix up a site, you could just hire a freelancer. You will need to incorporate their costs into your expected profit margin but they tend to be very cost effective.

When I had a chance to buy a friend’s website (HalloweenAlliance.com), I knew that it had potential. Although I had been hired as the webmaster for the previous few years, I knew the owner was not taking advantage of the many opportunities to make the site profitable.

She had tons of other websites linked to her but found it “not worthwhile” to her to hire someone on a continual basis. When she decided to sell, I bought the site (with no money down) for $2,500. I spent about 12 hours fixing the site and, in the end, I flipped the site for nearly $10,000. This of course, was after the site netted me about $10,000 within 18 months so as you can tell, the “investment” or time to flip the website was obviously worthwhile.

Website Marketplaces: Retail vs. Wholesale

June 30th, 2010

Before we look at the various flip strategies, it’s important to discuss the difference between the wholesale and retail markets. When researching this, I noticed that virtually no one discusses this concept but it can help you better meet your goals if you know the differences between the two different methods.

• Retail market. If you’re not in a hurry to sell and want to get top dollar for your website property, I would consider selling an established website on the retail market. This includes locations using a non-auction marketplace format and see what comes your way.

One example of a “retail” marketplace would be BuySellWebsite.com. At this resource, you place a classified advertisement where potential buyers review your ad and determine if it meets their needs. If so, they contact you via the marketplace email system. Depending on your site’s asking price, among other factors, you may have a good chance of receiving top dollar (providing it’s realistic) on the retail market.

• Wholesale market. This is where you’re seeking to sell the website at a quicker pace. That doesn’t mean you won’t get top dollar but it tends to tell potential buyers that you’re more motivated than if you sold on the retail market. Auction sites, especially if they offer a Buy It Now (BIN) feature, tend to sell faster than retail (non-auction) marketplaces but usually at a lower selling price.

The most obvious example of a wholesale marketplace would be Flippa.com where both the auction and BIN features are available. As a seller, you’re not required to provide a BIN price but it is an option to consider.

While there are various strategies for flipping websites, they’re generally three key components to a successful turnaround:

1. Buy an established website at the right price.
2. Fix or add website features to boost value.
3. Develop a solid sales campaign to sell the website.

Flipping Websites and the New York Times

June 27th, 2010

If you’ve ever watched the Discovery Channel, you’ve probably seen one the most popular game shows on television, Flip this House. The object of the game is to buy a piece of property (usually a single family home or condo), fix it up then sell it for a tidy profit.

While the concept sounds enticing—almost too tempting—watching the show after an episode or two, you’ll quickly recognize that it may not be as easy as one may think. Despite some of the challenges contestants encounter, it’s always nice to see when an investor is able to buy a piece of property, fix and flip it while stuffing some extra cash into their pocket.

Similar to real estate investors, internet developers, webmasters and internet marketers are buying websites, improving them, then flipping a site for—you guessed it—a tidy profit. The formula for conducting a flip is virtually the same as in the world of real estate but at substantially less risk both financial and using vendors.

In the past few years, I have flipped about 10 income producing websites, some for substantial profits while others were sold just to provide an infusion of cash. The key was to buy at a good price, make proper improvements, beef up traffic then flip. A few may prefer to flip a site within a few weeks or even days for some motivated individuals, regardless, it can be a profitable opportunity.

An article published in the New York Times added credibility to the concept that virtually anyone could make money by flipping established website. It cites some incredible sources including eBay and Sitepoint.com about the tremendous growth in activity. More importantly is that there are still TONS of great opportunities to be had even right now.

New York Times

Website For Sale – Closing the Deal

June 13th, 2010

If everything seems to “feel right” for both the buyer and seller and you see that this could be a possible transaction, there are just a few more steps you need to conduct before the deal is struck. These include the negotiation process, drafting a sales agreement, options for transacting funds, and finally, transferring the domain/website. Let’s take a closer look at each step in completing a successful transaction.

Negotiating for Success
The first step for closing a deal is the negotiation process. For auctions, it’s not so tedious but sometimes certain elements need to be worked out before money is exchanged. Unfortunately, negotiations is an area that can make
you nervous, especially if you’re not experienced. Before I discuss a few tips, you may not realize it but as individuals, we negotiate everyday. Interacting with your kids, co-workers, fellow drivers and other adults are, in essence, part of negotiating in our everyday lives.

However, it seems to be a whole different ball game when it comes to buying or selling something that is very important to you. To take out some of the “sting,” here are a few tips to help you get the most.

1. Always be courteous and respectful. It doesn’t take a rocket scientist to figure out this one. Being cocky or arrogant is a known deal breaker. Always treat the other party with respect and dignity. Not only does this present you
in a professional manner, it is will take some stress off the negotiation process.

2. Remove emotions. For sellers, you could still be sentimental and for buyers, you could be excited about scoring a great deal but emotions tend to cloud your judgement and can sometimes get in your way. Take your emotions off the table and wait until the deal is signed, sealed and delivered.

3. Flexibility. If you hold the attitude of “it’s my way or the highway,” then you may be losing before you even start. One of the keys to the negotiation process is giving and taking, hence the reason why it’s called negotiating.
Having flexibility is one of the keys.
4. Listen or read communications very carefully. If there is something you don’t understand or you need clarification, just ask. It’s the best way to learn about the other party and could be to your advantage.

5. Always try to develop a win-win deal. Another key to the successful negotiation process is understanding the other party’s perspective. You may not totally agree with it but, nonetheless, it’s an important consideration. If
sticking points arise where neither party can agree, move on to another element of the deal or take a breather and come back to that issue at another time. When it’s time to return “to the table,” and if both parties still have a sticking point, maybe you want to concede one element and the other party can concede the other. In this scenario, you’re both not getting everything you want but you’re both willing to work with the other to close the deal.

6. Never be rushed into closing a deal. Sometimes there are reasons a seller or buyer may have to close without always disclosing the full reason. If you feel you’re being “strong armed” into a deal and don’t feel comfortable, then ask to take a few hours or break for the day. If the other party is insistent, ask why? If their response doesn’t sit well with you, then this may not be the deal you originally thought. (On a personal note, ultimatums have never sat well with me and can be an instant turn-off for others so you’ll have to judge the situation carefully if it arises). If everything works out to both party’s satisfaction, the next step of closing the transaction process is developing a written agreement.

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