A few months ago, I had the opportunity to talk to Josh Shogren, the owner of Passion into Paychecks. Josh has been working on building an income online from Amazon FBA, and more recently, has been getting into website investing. Like me, Josh sees a ton of opportunity in the website investing space and I was really pleased to get the opportunity to talk to him about his investing process and how he approaches buying digital assets. Josh also interviewed me – you can see that interview here.
Josh is a younger guy, but he’s already amassed significant experience with online business and he has some smart things to say about investing in digital assets. Now, without further ado, on to the interview.
What got you interested in buying websites in the first place?
I initially started creating my own websites and built a couple up to making a couple hundred a month. I sold one of those for $14,000 around 7 months ago. This is what really got me into the whole buying/selling websites.
However, what got me interested in buying websites is the fact that you can skip the 3-6 month grind of creating a new website and trying to rank it in Google. Instead, you can buy a website that is established and earning money each month and completely bypass that whole waiting period of not making money that you have with creating a new site.
Not to mention that you also get to alleviate the risk of the site not being successful. If you buy a website that is already making money you know exactly what you are getting yourself and get a money making asset almost overnight. That is what got me hooked on buying sites!
What type of sites are you looking for?
I mainly look for sites that have established traffic but the owner is not properly monetizing this traffic. For example, one site that I just bought recently was getting close to 2,000 visitors each day but is being monetized by Adsense only. I am testing out a couple of different strategies for this site including direct advertisers and dropshipping. It is too early to see the results for these alternative ways to monetize the site but I am confident that I will be able to earn more than Adsense.
From what I have seen, Adsense is probably the worst way to monetize a site. 90% of the time you can find a better way to make money with a website. There are exceptions depending on the type of traffic or niche that your site is in, but most of the time you can find a monetization method that is more effective than Adsense.
One thing that I like to see is for them to be created by a passionate owner that doesn’t know anything about SEO, optimizing the site, internet marketing or anything of that sort. These types of sites are hard to come by, but they also are the ones that will give you biggest opportunity to improve quickly.
To explain what I am talking about a little further, I will give you an example of a website that I was interested in buying not too long ago.
The site was in the antique niche and was created by a lady that was passionate about antiques. She had written a ton of good content for the site and it was ranking for hundreds of keywords in Google. The content was top tier and had links from sites such as the Seattle Art museum. However, she had no clue on how to monetize the site and had 3 poorly placed ads on the site.
These are the types of sites I like to buy. They have SO much potential to be improved, but the best part is that the content on the site is of the highest quality because the owner was an expert within that niche.
What kind of due diligence do you perform and what tools do you use to do so?
Due diligence is, in my opinion, the most important part of website investing. If you do not know how to determine a good vs. bad website you don’t have a very good shot at being successful.
The main things I look at when doing due diligence are:
- Age – I like to see the site be at least 1 year old, preferably older. The older the better as it usually means the website i of higher quality as it has lasted through the years. I use the Wayback machine to see what the site looked like in the past. This gives you a good idea of how it has transformed over time.
- Traffic – I like to see either flat or rising traffic. I also like to see traffic that has history, meaning that there is more than 3 months of traffic. I like there to be at least a year of traffic, this helps filter out a lot of scammy sites. I ALWAYS ask for Google Analytics access to the site before I place any offer on a site.
- Keyword Check – I usually like to look at sites that have organic traffic. So that means that the sites I am looking at all claim that they are getting a certain amount of organic traffic. What I like to do is Semrush, which is my favorite tool, to verify their organic traffic claims. For example, if a site was claiming 15k organic visitors per month and according to Semrush it had only 5 keywords in the top 20, that would look suspicious to me. Either those 5 keywords are all keywords with a large amount of monthly searches or the site is a scam. Whatever it may be, it is good info to know about a site and that is why I like to check every site with Semrush before I place any sort of offer.
- Backlink Profile – I like to use Majestic SEO to check each site that I am interested in. This way I can see if the sites have a clean link profile or now. I also can see what types of sites they have links from. To use the antique site that I almost bought as an example, it had a backlink from the Seattle Art museum and you can be sure that they would not be linking to this site unless it was of high quality. You can do the same sort of thing for other sites too. If the site has backlinks from a bunch of reputable sites within the sites niche then you have a pretty good idea that it is a good, authority site that is respected.
- Content Quality – Before I think about offering any money for a site I make sure to read a good majority of the content on the site to ensure it is good quality. It will very easy to tell if the content was written by an English speaking writer or not.
- See if it has Been Penalized Before – I use FE International’s penalty checker tool, which is a really cool and useful tool. It will show you each one of the major Google updates and will show you how that specific traffic’s site responds to it. I make sure to run each site through this to check to see if the site is healthy or not
- Verified Earnings – However they are monetizing the site make sure you can verify that their earning claim is legit. This could be through video or Flippa can verify the earnings as well.
Those are the main things that I look for when doing due diligence on a potential site.
Are you looking mainly at Flippa or do you use brokers as well? What brokers do you prefer (if you use any)?
I mainly look at Flippa, Empire Flippers or FE International currently. Between those 3 I am able to have a good selection of sites.
How do you perform valuations? What valuation methodology do you prefer? (e.g multiples method, traffic valuation, etc)
I like to use the monthly profit average as the baseline valuation. This gives me a good starting point to value the site. I then take a look at the traffic to see if it lowers or raises the value. For example, a site with multiple traffic sources and room to improve organic traffic then that will raise the value of the site to me.
The other thing that I like to use to value sites is to look at their earning potential. If I think there is room to improve the earnings of a site then that will also increase the value of the site to me.
Basically, I like to use a combination of things to value the site.
What kind of steps will you look to take after purchasing a site? What’s your immediate focus? Is it SEO? Is it building an email list? CRO?
This really depends on the site and will vary. However, I like to do two things on almost all of my sites that I get.
The first thing that I do is test out different monetization methods to see if I can find a better way to monetize the site. This could be changing from adsense to direct advertisers or from Amazon Affiliate to drop shipping. Whatever it may be, I like to test out as many different ways to monetize the site as possible so I can see firsthand which one works the best.
The other thing that I always do is create a content plan for the site. I am really good at doing keyword research and finding long tail keywords to target. I like to get a list of articles that I want to have published and I will go out and hire someone to write them for me.
Do you have any specific tips for first time buyers/sellers?
Start with a small site first. I wouldn’t suggest go out and buy a $50k site for your very first one. I would go find a site under $10, preferably under $5k, and use that as a test site and see if you can have success with it. If you find success and enjoy doing it, then you can then start moving up to higher priced websites.
As someone who’s had significant experience building websites (and some experience buying) – which do you think is a more interesting path?
I think that by building multiple sites into good earners that I have built up the skills to be able to grow and run websites. Operating these sites has given me a ton of experience that is invaluable.
With that being said, I am moving away from creating sites from scratch because the ROI on my time and effort is not good enough. Nowadays, you will start a site and you will not be able to earn much of anything until at least 4-6 months down the road. This is due to Google making it extremely hard for new sites to rank. Not to mention that there is a possibility that the site you spend 6 months on building from scratch may or may not ever make you any money.
On the other hand, you can skip all of this grunt work by buying a site that is already established and earning money. There are so many advantages to buying an already established site instead of creating one from scratch and I do not see myself starting any sites again any time soon.
How far are you planning to scale your website buying?
I think that website investing has the opportunity to be an investment strategy such as stocks are today. Yes, it has a LONG way to go until that happens but I think there is potential. With that being said, I am trying to take advantage of websites still being deeply undervalued and try to build up a nice portfolio of sites.
I also have been in contact with investors and I am going to be using investors to scale my website buying to the next level. I already have a couple on board and I am excited about the opportunity.