Update: Although PBNs still work, they now have a history of being targeted by Google and therefore may not be the safest option. This is why we now focus on creating online businesses that are independent of SEO traffic. Click here to see what we are currently up to.
The topic of building and flipping sites for upfront cash has gathered pace in the IM space over the past 12-18 months.
Spencer from NichePursuits.com is looking at offloading a site he recently purchased as he is focussed on other projects. Within our Internships, we have a number of Interns that have sold sites in the $5-$20k range and one contact that sold a site for $200,000.
The guys at Empire Flippers have taken the bold step of completely re-branding their business to a website marketplace and are quickly becoming significant players in the site flipping space. I love what they are doing! It seems like there is a limited window of opportunity right now where there are more buyers in the marketplace than sellers (the EF guys are certainly saying that).
That’s something we want to get a piece of.
But how viable is site flipping as a business model?
In December 2013 and January 2014 Hayden and I had launched our second wave of sites in partnership, following our relatively successful first batch together.
This time, rather than looking to make money from those sites, we set out to specifically build sites, rank them as quickly as possible, and flip them at the 6 month mark for 20x. We wanted to test the feasibility of it as a business model.
Specifically, we wanted to identify our Minimum Viable Product (MVP).
- Would people buy websites that were link built purely with PBN links?
- Does the look of the site matter? (we usually use out-of-the-box themes)
- Is 100% of the traffic coming from Google an issue?
- Would we need to setup social media profiles to round out the sites for sale?
- How many months of earnings would be required to satisfy buyers?
- What earnings multiple could we sell on? (we figured 16-18x would be about the mark)
- How quickly do sites sell once listed?
If the answers were favorable, we figured we’re able to scale the process of building out sites and flipping some of them for upfront cash. Our process is built around solid KW research and on-page SEO, building simple sites, outsourcing content and link building from a PBN. We tweak our processes and test new SEO tactics, but don’t waver too much from that.
As we went through the process of launching new sites early this year, we soon found that the Google sandbox was going to be an initial hurdle to get over as it is now taking 3, more like 4-6 months for new sites to rank. So perhaps flipping in 6 months was going to be out of the question in most instances.
However, one of our sites that we launched in January got out the gates very quickly. This thing just kept climbing to position 2 in about 6 weeks, position 1 in under 90 days. It made $s in it’s first month (off long-tail KWs).
- Jan – $92.52
- Feb – $619.69
- Mar – $1117.66
- Apr – $713.27
- May – $1005.31
- June 1st-15th – $584.72
Empire Flippers price their sites at the average monthly earnings over the past 90 days, less expenses x 20. What you list for and what you get will probably differ, which we expected.
Expenses for this site were very low at $25 per month.
We had the site listed initially for $16,580 and it increased to $17,767.66 whilst on the market to cater for revenue growth.
Sale Process & Timeline:
- April 24th: Commenced the listing process with Empire Flippers
- April 28th: EF completed their site vetting process and suggested to list that day at a price I was not keen on (I thought the price was based on last 30 days revenue, not average 30 days revenue over 90 days). Decided to sit on it for a couple more weeks until the valuation came up a bit
- May 12th: Listing went live on EF marketplace
- May 16th: First depositor – A quick sale on the cards? Nope. Potential buyer asked a ton of questions and then decided there was not enough growth left in the site… A misguided soul, but that’s just my opinion.
- May 26th: Second depositor. Maybe this time? Nope.
- June 5th: Third depositor: Third time lucky?
- June 10th: First offer came in (not sure it it was the third depositor or not). Offer was $15k.
- June 11th: I counter-offered at $17.5k
- June 11th: Buyer came back with $16k. We decided to take it.
Overall, I feel it was probably $2k unders for what is fair value for the site based on the last 30 days of earnings, but when you have $16k on the table and EF take 15% of any increase anyway, and Hayden and I then split 50%/50% – what’s the point haggling for a few hundred bucks extra.
So $16k it was. SOLD!
Overall, we made +$20k of earnings from the site between the sale and Adsense revenue. The site was 17 pages of content in total. Factoring costs of the EF 15% fee, first-time listing fee of $297, cost of content and links (we did some PBN links for content trades, but it’d amount to $300-$400 normally), that site was offloaded in under 7 months for about $17k profit, which is $1k of profit per piece of content. Not bad!
- Sites link built with PBN links = no problem
- 100% traffic coming from Google not a barrier for buyers = tick
- Sites can sell at a decent multiple (approx 16x in this instance) = tick
- Basic theme ok and social media profiles not required = tick
- Months of decent earnings required – I suspect 6 at a minimum, but you need 90 days solid to get fair value for your site. We think selling at 9-12 months will optimize earnings = Seems to work fine
- Time on the market, 30 days = tick
So on a single site flip case study, we’re encouraged enough by it to incorporate it into out operating model moving forward. We’re now partnering with our high-performing Internship graduates on partnership authority sites. These Intern graduates receive the upfront training during their Internship and then unlimited access to our PBN to link build the sites built in partnership after the Internship. Selling some of these sites to help our Intern partners generate some upfront cash is now very much within our planning.