Make money fixing up cheap websites and resell for a big profit

Although this idea has been floating around for a while, I haven't really seen it fully discussed in minute detail. It is just an application of existing offline real estate strategies to online properties.

Here's my thoughts on how to do this correctly:

1) Read through a list of already developed functioning websites at Completed sites section of the buy and sell forum of DigitalPoint and dozens of other sales/announcement sections at many other sites.

2) Analyze the site for sale. Figure out:
a) What is the business model for the site? Advertising? Affiliate sales? Both?

b) What is the CATEGORY/NICHE of the site? Is it a growing category? Is it fairly static? Is the site a specialty niche site? How lucrative is the target market? Is there a high PPC value for that niche market?

c) Second tier of analysis:

If the site is an advertising site, do a PPC analysis focusing on category, average PPC, and most common keywords.

If the site is an affiliate sales/newsletter site, what is the current volume of sales? Identify similar affiliate programs/newsletter sites and how much they charge. How competitive is this space?

3) Analyze the TOTAL COST of the site. Figure out:
a) Sale cost
b) Recurring costs
c) Content costs

4) Traffic analysis
a) Using free and paid services, as well as the seller's own records, figure out how much traffic the site is getting. Is it growing or shrinking? Is it all from one place or distributed?
b) SEO analysis. How much, if any, traffic comes from SE's? What keywords? SERP rankings? Link analysis. How many 1way? How many 2 way links?

BUYING GUIDELINE:

You want to buy a "used" site that has the following characteristics:
1) Focuses on a product/service category that is stable or growing
2) Focuses on affiliate products that are steady sellers or growing in sales OR
focuses on PPC keywords that have decent (10 cents or more per click on average) PPC valuation
3) Involves content that is either user generated (free content) or relatively cheap to generate. Usually, content cost is not that big of a factor since original content nowadays can be written for 1 cent a word or less. Content cost would be a big factor if the content is extremely technical, involves cutting-edge research, or extensive case studies. For most consumer content, content cost is manageable.
4) Uses a domain name that is either a keyword of the site's niche or easily brandable. Sites that have - might or might not be problematic depending on how you'll market the site
5) Has SOME traffic. While traffic is not that big of a concern, the site should have SOME traffic existing already. This serves as a partial validation of the site's value. The reason traffic is not that big of a concern is because it is ONE of the problems you'll be fixing when rehabilitating the site for resale.

I'll pause for questions for now but after a few comments and questions, I'll post the rest of this tutorial (we'll cover rehab assessment, rehab, costs, and resale).

If you need any aspect of this process outsourced for cheap, let me know. I can help you with reports on which sites to buy, problems to fix, linkbuilding/traffic generation (many of the techniques are covered at my blog http://justtraffic.blogspot.com) cheap designers/content, and even help you to resell it.

(c) 2007 Webmasterlabor.Com

 

in fact, i started off like that, about a year ago. i used to work in real estate, so i thought why not apply it to website. i buy one off ebay (you can get it at $30-$100 depending on the design), then i build links, submit to directories, and can resell it for $200-$400. not alot, but it's fun and i don't spend as much time on it anyway.

 

good article.
i was thinking of trying out business in this field of web development

 

Exactly. That's one way to do it. I'll also cover differing TIERS of how to do this. Tons of examples and budgets out there.

 

good article there, WML. i look forward to hearing your views.

 

It's a good complement to what you're already doing.

 

do you usually aim for PR and traffic before selling out or just build a number of backlinks?

 

both, it increases the value. i usually try to get at least 20/day.

 

Please post your questions re the items I've covered so far. Comments are appreciated as well.

 

interesting. Can;t wait for the next part. I think i'll implement this in my online portfolio plan..lol
i gave you green rep

 

Nice write up.
Green rep for you.

 

Thanks. Another approach would be to develop sites ready to be fixed and "filipped." With each sale, the price goes up

 

This one is pretty good: http://forums.digitalpoint.com/showthread.php?t=306559

Needs some tweaking re encouraging people to upload. This is fairly easy to fix and fairly easy to promote. Viral model.

 

i didn't read any of that..but thanks!

 

Thanks for the bump though

 

could you explain further what you mean by flipped..and subsequently the price going up?
thanks

 

flipped = resell with higher price with some modifications..
; )

 

thanks butterfingers for clarifying..green rep for you

 

Thats a market to but it's not so intrested for me or anyoane that knows what he is doing ...

 

Besides the BUYING GUIDELINE outlined above, here are some things to look for when buying a site for rehabilitation and resale purposes.

1) How many one way backlinks does the site have? Do a quick check by using this tool: http://www.webuildpages.com/neat-o/ There's also a ton of linkback checkers out there. The key is to get both linkbacks and the ANCHOR TEXT used to get the linkbacks. Study the anchor text carefully. Are they related to the niche? Also, off niche anchor links may give a clue re old content/business model of the site. This may or may not help you depending on the niche direction you have in mind for the site after you buy it.

2) What % are from link directories and other similar sites? Check for link farms and low quality sites. Do a check on who links to the sites that link to the site you want to buy. This is a good way to uncover website "pump and dump" scams. What % are from more 'natural' link sources (ie., actual blog posts, voluntary/unpaid reviews, etc)?

3) What is the Alexa ranking of the site? NOTE: this is NOT dispositive. Alexa rankings' value in terms of actual traffic is very much in debate. However, it is ALSO a reality that many site sellers refer to it when selling their site. Be prepared for this by studying their Alexa trend. Did it spike up all of a sudden during a certain period? What is the demographic of the site's content? Does it target a demographic that is more likely to have the Alexa toolbar installed?

4) How old is the domain? The general rule is that the older the domain, the better. Is the domain distinctive or can it be easily 'poached' using similar domains? Did the owner cover his bases by buying all the other TLD extensions to his domain? Is there GOODWILL attached to the domain (ie., how many direct visitors does the site get. Does it get a lot of 'word of mouth' traffic?)

5) Was the site developed by the owner or did he/she buy it from someone else? If the latter, what were the improvements?

6) Are there similar sites on sale? How similar are they to the site you're trying to buy (traffic profile, domain, target market, links, etc)? What is their price range?

All of the factors above must be taken into consideration when formulating a comfortable price range from which to start your pricing calculation. Here's some additional key factors to keep in mind.

a) What will be your costs in rehabilitating the site? Normally, rehab costs will take the form of i. design/redesign costs ii. buying new links iii. buying traffic to test ad or order form or affiliate conversion.

b) How long would it take to rehab the site and get it ready for resale? This is very important. Opportunity costs are often ignored by webmasters in their business decisions.

c) How easy is the site to sell to existing content networks? If it isn't easy, how much will the content cost to go this route?

SIMPLE FORMULA IN DECIDING SITE ACQUISITION FEASIBILITY

COSTS + REHAB COSTS + LOST REVENUE FOR RAMP UP TIME + YOUR DESIRED MARGIN (% markup) < RESALE PRICE RANGE Seems simple enough but people often forget opportunity costs or their cost projections are too rosy.


BUYING TRANSACTION

Assuming the numbers add up and you went ahead and decided to buy, here's some buying transaction tips.

1) Use an escrow service for the transfer
2) Protect yourself from ripoffs by using a site that allows for seller/buyer rankings/feedback
3) If the seller alread has some feedback, take the time to read through all that feedback. This might save you a lot of headaches.

In the next installment, I'll discuss rehabilitation issues. We'll focus on an action plan, troubleshooting, and avoiding cost overruns.

(c) 2007 Webmasterlabor.Com ( Feel free to reprint as long as you provide a linkback to http://www.webmasterlabor.com with the anchor text of Website Copywriter )