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Is it really that great of an Investment?

Discussion in 'Site Flipping' started by RossettaStoned, Jul 12, 2014.

  1. RossettaStoned

    RossettaStoned Newbie

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    I mean the numbers look great for most of these sites that I see selling. Look at the ROI of some of these sites that sell for 80-90K. Usually these sites are churning out monthly earnings at about 1/12th of that. It just seems to me that the big boys (I.E Big time investors) would be coming in and buying up EVERYTHING if the numbers really worked out like they should. Most of the sites that I see sell for 12x their monthly income. What other industry can you do that in?! Real Estate? Buy an $80K house and rent it for 1k per month and have it paid off in a decade.
    Is it the predictability of the online realm (or lack thereof) that scares them off? In one days time your earnings could go from 10k a month to zilch.

    I just don't understand and anyone with more knowledge than I possess in this field is welcome to explain the whole 9 yards.
     
  2. mickyfu

    mickyfu Jr. VIP Jr. VIP Premium Member

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    The reason why I only advertise for anything with lifetime rev share. I could sit around for the next six month doing nothing, all websites gone, and still make great money.
     
  3. Duffers5000

    Duffers5000 Elite Member

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    The safer the investment the more you have to pay for it and the less it will return.

    Websites wont just keep churning out money and you will need to spend a lot of money on updating them daily so buying a website is the same as buying a risky business and is not like property at all.
     
  4. 2spoons

    2spoons Regular Member Premium Member

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    The question I always ask myself is - why is this person selling? I like to follow the example of people like Warren Buffet who are smart as hell and know how to invest, and their ethos is almost always "Don't sell an income generating asset". If a website is run well it will make a wonderful monthly income PLUS grow in capital value. Therefore a good website should be HELD and not sold.

    If website is being sold it leads me to conclude that, for the most part, the website is in decline and isn't going to perform as it has done in past.
     
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  5. Asif WILSON Khan

    Asif WILSON Khan Executive VIP Premium Member

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    That isn't really true. There may be a variety of reasons why an asset may have to be sold. The fact it is being sold doesn't necessarily mean it has or will lose value. Smart investors look at the bigger picture and the area that takes the most skill is determining when to buy and when to sell. With all investment there is an element of risk, websites are no different.
     
  6. phirex

    phirex Power Member

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    MY question is, where do you buy $80K Houses? you cant get them for less than $250K here, for the shitty ones
     
  7. RossettaStoned

    RossettaStoned Newbie

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    The great state of Texas.
     
  8. Trepanated

    Trepanated Supreme Member

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    And the next question is where are these $80K houses that rent for $1K per month?

    I'd take a 15% rental return on property all day long.
     
  9. RossettaStoned

    RossettaStoned Newbie

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    Growing rural town 15 minutes south of Dallas/Ft Worth. Very prime location for people to move out of the city.
     
  10. SavageX

    SavageX Junior Member

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    I often think that aswell.

    But then I think about explaining the most basic of IT concepts to people and them not understanding, (try asking someone what ftp is). Not everyone has the skills/knowledge in web hosting/content/marketing/etc AND the skills/knowledge in investment aswell. So in order for an investor to make a return on a site they would need to outsource / hire someone to run the site and marketing/content, and now it becomes a massive cost that makes most investments not worth it, especially low value websites, like 99.99% of websites are (<1mil). The bigger websites are more like businesses than websites and so get investment/sold from/in other avenues that flippa etc.

    So basically the return you see 12x monthly or w/e is not actually the return you get after you pay for these extra running costs and time. Thats my thoughts anyway.
     
  11. WPRipper

    WPRipper Supreme Member

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    And why investors are still paying big money for sites not to mention premium domains? My answer for you is PLANNING. Every kind of investment is risky but if you have even a small plan, you cut out that risk a lot.

    I bought an old house from '54 last year, great historical value . Payed a lot of money, with a PLAN in mind to transform it into a small museum. Risky? Yes, but i had a PLAN. I dont want to get into details, but today is bringing me (to my mom) a great residual income.

    The point of this? If you think that investment is only about buying something and waiting for the gold fish, you dont know what this really means.
     
  12. meathead1234

    meathead1234 Moderator Staff Member Moderator Premium Member

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    Legit sites tend to sell around 2-2.5x net income so the return isn't as high as you're stating. At that level, there are plenty of investors buying up everything legitimate.

    You won't find a site selling for 1x like you're stating unless there is something wrong with it (there are some exceptions but you won't find anything passive with history in an evergreen niche for 1x)
     
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