What is the best type of established site to buy for a newbie to safely make money?

[KenW3]

...with a huge emphasis on safety starting out. I was hit with a similar question today from a neighbor who has been out of work for almost six months, receiving unemployment compensation. We ended up in a discussion about web sites, because he knows what I do to make money.

The guy is not holding out much hope for finding work, so is looking for ways to eventually be his own employer. While talking, he mentioned looking for sites to buy that were already making money. After asking where (and being amused at the stories), I asked about starting investment. It was very low ($3,000 US) unless he used credit. (He thought it was a lot.)

About credit: He asked about buying sites with his credit card to get more money coming in faster. That was my fault as we were discussing multiples and I mentioned 2 or 3 years. He said he has a card that charges 14% and automatically jumped to: If a site paid off in 2 years, that was 50% return and should max out the card to pocket the difference.

My first reaction to that was "aargh" absolutely not starting out. I suggested -No- due to risk, but thought it might help to get opinions on that also. Thinking back, I'm wondering now if that answer was not quite as obvious as it seemed at the time. Oops, I'm rambling here, sorry, back to what to suggest:

What type of site is safest when first starting out? Should I recommend learning how to make a site profitable first, before he buys any? Should he try and diversify by trying to buy a couple sites at first?

Which sites have the least risk? What should he look for? Is there anything truly safe enough for a new site buyer with limited resources? Was my suggestion to not finance correct? What else needs to be considered?

Your advice on any of the above questions will help. I'll admit second-guessing what was suggested... and was going to add more of the discussion to this, but don't want to influence your thoughts. Thank you for any ideas on how to approach this.

P.S. I have been reading the posts in this section the past few hours for ideas, but most discussions involve queries from people who seem to know enough about what they are doing to not be considered new, except for a couple of threads that don't get into specifics much.

[MrP]

I would come under the class of complete newbie - I still don't really know what type of site to look for either. I'm guessing at 'evergreen content'. I gather nothing is truly a safe bet and any site purchase has it's risks. And, if a site is low risk, it's probably snapped up real quick.

Should I recommend learning how to make a site profitable first, before he buys any?

Personally, I think that understanding at least some of the various ways of how sites make money would be an advantage. Also learning some of the due diligence stuff.

What else needs to be considered?

Maybe some basic knowledge of SEO and link building.

It was very low ($3,000 US) unless he used credit. (He thought it was a lot.)

Honestly, I completely agree with him - thats a small fortune to me. Especially to chance on something that I've never done before and don't know that much about. That's why I'm here - trying to learn how to play like the big boys!

[grynge]

Find out what he actually likes, making money is much easier if you enjoy the subject of the website. Then start looking at sites in that niche to get some ideas. See if they are monetized and how they are monetized, try and gauge a feeling of what the traffic is like. Once you have more specifics you can see if it would be worth entering the niche either with a purchase or starting afresh.

I have found that if people have little coding knowledge and little budget they really don't have a good chance of succeeding unless it is based on something they actually enjoy. The majority of successful sites have come about because the owner enjoy the subject.

[ScottJ]

I'd agree, an evergreen subject that Google is unlikely to stamp on in the near future and preferably on a topic he could either get into to add content/value or already has an interest in.

I have used credit quite a few times to finance sites but generally in a separate business that can afford to take a hit and one that doesn't pay my bills, when borrowing the business could afford to pay back the credit even if the new site earned zero and as the business has grown the borrowing has usually only been for a couple of months for outright purchases. In saying that (personally) if no job was on the horizon and I had done enough late nights reading & learning I would consider borrowing to help get the traction needed, maybe buy a small site first to get my feet wet, it would be a long road to go from $3k to producing an income that could sustain a household but I'm fairly confident that there are always rewards out there for those that can get past the boredom and due the legwork that others shirk at. The best domains & sites I have found that have offered the largest rewards financially have just been sitting there waiting for someone to find them and go that extra mile to find the owner or convince them to sell.

[Clinton]

Borrowing to invest is tricky. In a BBC article discussing what Karl Marx got wrong and right about capitalism, they make an observation

When savings are melting away being thrifty can be the road to ruin. It's the person who borrows heavily and isn't afraid to declare bankruptcy that survives and goes on to prosper.

Leverage used properly, combined with a bit of luck, can make one very rich. The "using it properly" is the tricky bit. If he's new to website buying I'm sorry but he setting himself up for trouble.The first purchase or two really should be made with money he can afford to lose. The chances are he'll lose it or struggle to break even.

Maybe he should spend some time reading our Due Diligence and Gotchas first so he realises there are risks and they can be quite significant for the less experienced. If he's buying rather than building from scratch, it's DD that he needs to master first. He could read my own articles on the subject, read threads here or read blogs like hooperman's. It would be better if he avoided learning DD from sources that have a vested interest (such as Flippa who have in the past published material on DD some of which seems a bit er, self-serving)

The safest form of online investment for a newbie is probably a content site monetised with Adsense. But even there it's the due diligence that's the snag. For the first purchase or two I recommend he pays someone to do the DD for him. We have a thread here where he can find someone or he can choose from others whose posts demonstrate their ability at DD. Paid DD is more affordable for higher value sites. If DD for a $1M+ site is $10K, the DD on a $3K site could cost as much as the site itself! But it'll be worth every penny if he learns the DD ropes himself.

Find out what he actually likes, making money is much easier if you enjoy the subject of the website.

That applies if it's a content site and he's going to be creating content himself as you suggest. But I feel that if he's buying a business then it's the quality of that purchase as a business that's of main importance, not whether it's in a subject he enjoys. One of the sites that generated a very nice income for me and which I sold at a considerable profit was a site on pregnancy. That's a subject I have no interest in and, you won't be surprised to hear, pregnancy is a state I've got no personal experience with. I hired writers who were experts in the field. They did their job well leaving me to do the managing and monetising. Developing a hobby site is all very nice but it isn't scalable.

[KenW3]

Any website brokers that fit this description?

And the story from two months ago, detailed above, continues. Same time. Same channel. Same query, so a brief update is available

Another long discussion made short, guy across the street wants to make money with web sites, knows of my ongoing adventures in business, and wants not just help, but the safety provided by hard-earned knowledge. I have provided advice, but am unwilling to do his background work and assess safety for website purchases.

I relayed information from this thread, provided context for the expertise presented, but did not suggest he join EP. I've known the guy 15 years; He is computer (and limited web site) literate, thus our ability to communicate, but I cannot be responsible for risk and this is what he wants. The paranoia of losing everything invested in a site will prevent any purchase, so I doubt he will ever buy one. (I suggested buying more than one, for diversification of risk, but he found that even more difficult as a starting proposition.)


That caused a thought, not discussed, and a question for website brokers. Now that the background for the following query is in place, please forget selling a site to the guy above. (I can't help him.) If you are a broker, know the operations for site brokerage, or even if you have bought sites through brokers, you may have input for one of the following questions:

Do website purchase contracts exist that price future performance into the multiple?

Are there similar contracts for sites (like those for B&M businesses), that enact financial (or criminal) penalties for (known and unknown) seller errors and omissions?

Are website financing options available that adjust future payments based upon accuracy of business revenue information provided at the time of purchase?

What level of DD work do brokers perform, and what responsibility does payment of their fees imply, if any?

Last, but not least: Do any website brokers exist that would take any responsibility at all, for their client's safety and future success, under contract, partnering, or funding?

[Denny]

I'm a "glass is half full" guy, but I feel compelled to offer a different opinion here; I've been trying to purchase sites for around 2 years now, and reading everything I can get my hands on about internet marketing etc. It's because I want to diversify from my long standing contract programming business though, not becuase I'm out of work. If I put myself in the gentleman's shoes that's been on unemployment for six months though, I would put all my daily efforts on becoming employed again, doing what I'm experienced in for many reasons:
1. $3000 seems like a lot of money to you
2. You have no experience in internet marketing
3. Using a credit card to fund an internet site for which you have no experience is a really bad idea in my opinion.
These are the first 3 reasons that come to mind quickly.
Again, I really hate to present a negative response to the question, but if I was going to completely change my career path, I would start the process while I was employed as I don't know of any inexpensive way to accomplish that feat.
4.

[Clinton]

Great questions, Ken.

2. You have no experience in internet marketing

This is a pet peeve of mine - this idea that one needs to be an internet marketer to make money online.

[benitez17]

Do website purchase contracts exist that price future performance into the multiple?

Yes.

Are there similar contracts for sites (like those for B&M businesses), that enact financial (or criminal) penalties for (known and unknown) seller errors and omissions?

I don't see how a contract can enact criminal penalties, but it is possible to include financial penalties for errors and omissions.

Are website financing options available that adjust future payments based upon accuracy of business revenue information provided at the time of purchase?

Isn't this the same as 1 & 2?

What level of DD work do brokers perform?

This varies wildly, from virtually none, to verification of revenue from payees to bank statements. They don't seem to do much in the way of verifying website traffic, SERP rankings, backlinks, etc., though some of the brokers on here might be an exception because they focus on brokering websites.

what responsibility does payment of their fees imply, if any?

Very little, if any. The contracts I have seen basically waive any responsibility they have for anything that could go wrong, other than something like intentionally providing false information.

Last, but not least: Do any website brokers exist that would take any responsibility at all, for their client's safety and future success, under contract, partnering, or funding?

Not that I am aware of. I certainly wouldn't take on that risk if I were a broker. By the way, their client is the seller, not the buyer, unless the buyer is paying them as well.

[Denny]

Great questions, Ken.


This is a pet peeve of mine - this idea that one needs to be an internet marketer to make money online.

Clinton: I was using that term in "general". I probably should've been more concise. What I really meant was; no experience in what's involved with purchasing or running a website.