Episode 004: Jacob E | Making Six Figures | Buying and Selling Websites

  • Making Six Figures from site acquisitions

  • How to look out for scams

  • What to look for to Improve Revenue

Resources Mentioned

 

  • Extra Valuable Info is Highlighted in Green
  • Mateen, (Interviewer): Bold and Italic Text
  • Jacob: Normal Text

YouTube Video

Jacob E | Making Six Figures From Buying and Selling Websites Interview Summary

 

Let’s have a bit of background what you did at school, did you study marketing. What led you to doing the whole online thing?

I do have an associate’s degree in computer networking and information technology from a now defunct college, the US government actually paid my college 20 million dollars to shut their doors.

Did they build something in that place?

It was just so crappy to be honest with you. College is great for some individuals for me it wasn’t my cup of tea anyways. I can’t really say I got anything out of the college I went to, besides the degree which then led me to get a job at compact which got bought out by HP as a computer assembler. Which I could’ve gotten anyways but at the same time it helped get my foot in the door and helped get me promotions and stuff throughout the company. So for that I’m thankful for, but digital marketing wasn’t on my radar at all at that time.

So how did you find out about it, did you read it up online?

The short version of the story; I was living in Colorado, I just started up in a computer repair company and whenever you start up a company you don’t really have  a lot of money coming in the door so, I got a part-time job carpet cleaning. What I would do is I’d carpet clean a house or two and then I’d jump in my truck and change out of my scrubs and put on something nice; kinda like superman right?

Then I’d go do a computer repair job and then when that was done change back into my scrubs and go clean more carpet. But I got tired of carpet cleaning, I didn’t like it so, literally I went to google and I typed in some stupid lag “How to make more money?” And that took me down to this rabbit hole of all these sites with pop-ups and ads and everything. And it just seemed like scam after scam and keep in my mind I knew nothing about affiliate marketing. I got really frustrated and I was like if I wanted a site with nothing but ads and I was like “you know what screw it! I’m just gonna build a website with nothing but ads on it.”  When you go to this website it’s just gonna pop-up all over the place, there’s gonna be flashing lights all over. I’m kind of in a grumpy mood and I was like I’m gonna do it.

So I went to godaddy and I bought a domain name I spelt it wrong “alotofads.com” I spelt “ alot” wrong, I spelt “ads” wrong, which kinda tells you two things, one is I’m a bad speller and two it speaks to my mind set there, I was just really frustrated and then next thing I did is I went to google and like ok, “How to put ads on your website?” And all of a sudden I come across this website called commission junction. And so you know it’s affiliate marketing and I looked at it I was like whoa! Wait a second you mean if somebody clicks on this banner and they buy stuff and that person makes money. I was like no wonder why these ads were out there.

This huge light bulb went off in my head, and I was like you can make money?! During this time I was like this is way better than carpet cleaning. So that was kind of my first introduction in to affiliate marketing.

 

So did you make a website with ads on it everywhere?

Yes I did. I still did it but I made it like a mall-type website. You know this was long ago that you could put up a really ugly website like that, ‘coz you know I didn’t really know how to code or anything like that and remarkably, I got some traffic and actually got some sales.

 

How do you get traffic?

Back then you just put up websites and that’s all you had to do. And that’s what got me started in the niche and from then I learned about back links and started reading up on SEO. It really took me probably six months to make my first $100 but once I did the next month it was 200, the month after that 400, 800 and it just kept snowballing on me to where I was able to build up quite a bit of money. It’s a lot of work, I’m not gonna say oh I sat down there and did nothing.

If I wasn’t doing a computer repair job, I was working on my website and trying to make money.

 

I remember when I first started affiliate marketing 1 or 2 weeks before I signed up to affplaybook. I remember counting down how many days would it take me to make my first sale, it took me 19 days. The amount of hours each day spending was easily 12 or 14 hours a day, the learning stuff, crying stuff, spending money here and there and 3 weeks  of that just to make my first dollar, it wasn’t even profit, just a sale, it takes time.

Yeah definitely, it’s a big learning curve. When you first step into this industry, people like us can write our ticket often times now. We have the skills, but it takes a long time before you become an expert at something. And often times you don’t love it, especially starting up, it’s a big pain it’s not something you necessarily enjoy because it’s all frustration.

But once it starts clicking for you and you start understanding stuff and you begin to like it. I love digital marketing now, and I love it because I’m good at it.

 

But you never would’ve thought you would’ve liked digital marketing right?

I’d say no. I’ve always been kind of financially savvy and business minded so that aspect of it I like. But as far as being a marketer and a sales person no, I wouldn’t have thought of myself as that at all.

 

Do you remember your first sale; was it like one of your best feelings?

I got really excited; somebody bought a dsl internet package from me and that was like a $30-40 commission.

 

Was that amazon ads or commission junction?

It was just commission junction.  I remember that being exciting. I remember another time where I went hiking and one of my sisters was in town, and when I came back I logged into adsense and I made $20. So I brought her in to the room and I showed her and I was look I didn’t do anything today, we were just hiking and I made $20 isn’t that awesome?  That got me really excited ‘coz that was actually my first bigger day of earnings for adsense. I made $20 in one day man!

 

Just from adsense, that must’ve been a ton of traffic or was it just the ads you were displaying?

It was just a type of ad, so it’s like 8-9 clicks something like that.

Even today, it can be highly profitable, I don’t recommend building websites just for adsense but it can be a decent form of monetization on sites, and definitely part of your monetization strategy but I would never have it be my main focus.

 

I know you’ve done a lot of things but I’m gonna try and focus on the whole and buying and selling aspect, because I know you’ve bought a few sites and successfully sold some. How did you get into that? Was that before you’ve had marketing or after?

I already had experience in there and I was making some decent money a month and I had money in the bank. So, I’m looking for ways to invest it, ways to grow the money as fast as possible and sure there’s real estate and other types of things you can do. But when you look at websites in general, especially then and there’s still great deals we have today, but even then a lot of sites were selling for 12-18 months profit.

So if I was making a $100 it would sell for $1200-1800.

 

That’s a lot less than the selling factories now isn’t it?

The selling factories’ been climbing so the market isn’t quite as open but there’s still a lot of room for profit in there, don’t get me wrong.  And still even then a lot of sites did sell for 36 months in income. But now you can buy a pretty established business for 36 months income and it’s well worth it. Compare that to a stock in the stock market or a real estate property or any type of investment and so really I was just looking for an investment and I stumbled upon across a few web selling platforms and started purchasing some sites.

 

Where did you find the websites to buy from? Flippa I think is the biggest one.

Yeah flippa is the biggest one currently, and there’s empire flippers, letonas that’s a brokerage one.

 

They’re more serious about the websites they sell, I think on flippa there’s so much junk as well.

Quiet light brokerage and Letonas, they’re both brokers. So, they themselves they do vetting on websites first. So, if you’re looking at high ticket items, and you’re looking to buy a website generally it’s best to get hooked up with a broker. I’m a big fan of quiet light brokerage, they know what they’re doing they’re experts.

 

So they got no any association with the website you’re buying from?

They are hired by the seller but they’re extremely knowledgeable and they’re going to look over all the factors in the website and something like only 1/10 is gonna qualify to be sold through them. Because they have to make sure that something reputable and something they could sell and the like. That’s a great way of finding businesses, but still a lot of people list stuff on flippa all the time. I was there just 2 weeks ago looking at sites and like you said there’s just so much junk that you gotta sift through but there’s a lot of diamonds in there still.

 

Once your product stops converting, I think a lot people just check their website on to flippa and then get a quick sale from it, but the buyer doesn’t know that in order to continue getting this kind of income; well first of all, the website’s only 3-4 months old and I feel sorry for some buyers sometimes because they pay sometimes up to $5,000-10,000+  and they don’t know they’re buying into website where their products not converting anymore or they have to find another way to generate sales for it.

Yeah, that’s part of the diligence process. Ensuring that it is a diversified traffic source and anything that has the majority of traffic coming in from social profiles, I’ll never touch. I want to see 70-80% organic. Unless it’s there, I want the website to be multiple years old so 3 years old, but the older the better. If it’s 10 years old and it’s been making let’s say $1,000 a month for 10 years. You better believe that sites gonna being making a $1,000 a month for probably the next several. Those are the type of sites you want, you’re not always gonna see them and sometimes you gotta pay up for them. But even those sites still only command like a 36 month income.

 

So let’s start with your first website, did you make a profit of your first website or was it more like a test-type thing?

I did make a tremendous profit, I think I got partly lucky and partly not. I was selling a software already as an affiliate and I came across a site that was in the registry cleaning niche and they ranked really well. I started digging into the website and their back link profile, they had a really good back link profile and it turns out that the person who was selling the site was a fantastic lady who was starting her own SEO consulting company, she had a lot of SEO guides out there so she knew what she was doing. Great sales material, it was written by a woman who knew what she was writing. It was the best written registry cleaning website on the web.

I wanna say that I was making $1500 a month or something like that. I was able to buy the site for 10 months income. Originally she was asking double that, but I ended up striking a deal that worked for her and worked for me. I went on to get the site to work a lot better and I started generating $300-500 a day from the site. It made good money for a number of years before google finally said alright we don’t like your website anymore. I made a lot of money I can’t complain.

I still have the website.

 

How did you make money from it? Were you an affiliate?

I was just selling registry cleaning software as an affiliate, PC optimization software.

 

What would be a good starting point for someone who wants to buy a website, do you reckon they should start off with a small amount of money, maybe $5000 just to buy something and see how the monetization process works?

It really depends; it’s not a case by case basis really. It depends upon your skill level, it depends upon what’s in your will-house and what isn’t.

If you were let’s say, somebody who’s very experienced in the student loan niche, and knew a whole about student loans because of your job or something like that and there’s this website for sale all about student loans and refinancing and the adsense on that could be crazy. If set up properly already and it’s generating money and you know what you’re doing and have knowledge in the niche then I’d say yeah, there’s nothing wrong clocking down a $100,000 on it. But you gotta be able to do your research and I’d probably reach out to somebody else who has sold websites and bought websites even hire a broker to consult with. And bring it up to your friends who are more experienced in the industry and have them look at the site for you and see what you can to pick apart.

It really depends upon what’s in your warehouse. Let’s say you’re not an expert at anything; and you come across a website, I would then say don’t pay a lot of money starting up the gate. There’s nothing wrong with buying a niche type website that’s very niche and that’s making maybe $100 a month. I’ll give you a good example; there was a body grooming website I bought, and body grooming is just a plight word of not saying ‘pubic hair shaving’. So this was a website that was all about shaving down there, and the guy sold it to me for like $800 it was making $70-100 a month. I wouldn’t have bought it but the site was making for 3+ years very consistently.

He was making money through selling a product as an affiliate, selling body grooming kits. The product was just there, and when people type in “how to shave your_____” and keywords related to that. It would show the top products you use to shave ‘there’. So he had these waxes, numbers of products and some are being sold as an affiliate through one company and some of it was amazon. And the amazon was profitable too, ‘coz you can put any number of products from amazon. For that I just pay like $800-1000 something like that for the website, I ran it for a year quadrupled the earnings and I just sold it ‘coz it wasn’t a niche for me, but that’s a good example that’s very product specific. Like people who are looking to shave need this.

 

So how did you increase income from it, was it an SEO strategy, did you split test other products?

All of the above, I wrote more content, I got more back links to the site and built it up, I reviewed a lot of products, I’ve rewrote the sales copy all of those types of things, tested out multiple different products. Ultimately at the end of the day I was just able to send more traffic to the website ‘coz the products over there was already selling, people wanted those products.

 

I think those how-to-guides, top websites can sell product pretty well because pretty much after you read something like that you’re looking for something to buy right?

Yeah, I love how-to-guides and I made a lot of money based upon that; how to remove xyz virus, how to transfer files from your old computer to your new computer, things like that. All you do is just tell them the solution, you help them out as much as you can and say oh but here’s a really easy way; just purchase the software and it’ll do it for you.

 

Let’s talk about the whole process from start to finish. Say you wanna buy a website,  flippa and all that is really good but you are competing with other people that obviously are watching the sale and will be bidding against you. Have you ever tried going around that and contacting websites directly?

I always just go through flippa and get their contact information and I’ve never buttoned a website where I haven’t been able to get the person on the phone. And if you can’t get them on the phone, don’t buy the website.

If they’re trying to scam you a lot of them won’t want to get on the phone. They wouldn’t want to be put on the spot.

The great thing is right then and there,  I always go for a win-win scenario, it has to be a win for me and just as important it has to be a win for them. If they’re not comfortable with it, then I don’t want to buy it from them, I don’t wanna box them into a corner. I want them to be happy with the sale, and if it is a win-win we strike a deal and they set the buy now bid, boom I buy it and done.

 

Is it just mostly buy now deal type thing or you just pay up $10000 for the website or do you workout some kind of other deal with a percentage; How do you make it kind of appealing , bargaining with their expectation?

A, I’ve never done seller financing, ‘coz it’s not worth it. And I’ve always had hundred percent ownership, so there’s never been a profit back or anything like that. It’s just purely monetary offer, so that’s the only type of offers I do otherwise it just gets too entangled.

It’ll be different if it’s a multi-million dollar deal then you kind of have to or you might have to still offer 5% percent ownership just to keep the person involved just in case. It’s beneficial for them, to as well ‘coz it’s their baby. Generally you just go through the financials and you go through the traffic sources and one of the biggest things that you see with all these websites out there is you have to look at it as a business and if I were to have to hire employees to run this website what do I gotta pay them and what’s the free cash flow left over. That free cash flow is what you build your multiplier off of. And most sellers don’t take their time into account or they say I only have to work 5 hours a week but it’s an ecommerce  website and they have to answer emails 8 times a day, and it might only be 5 minutes each time but that’s every 2 or 3 hours ha ving to check up on it.

So you need to understand that and relate that to the individual.  That’s why you have to make sure that when you’re purchasing website, if you already have something working for you and you go to acquire another website it has to fit into that will house, you have to be able to take your existing  process and have this fit into it, that way it helps reduce the overall cost. And if it doesn’t, it’s a bad acquisition and you should run away.

 

Have you ever found a website that’s been completely under monetized or not monetized at all and you’ve done a small addition flipped the website around?

I’ve seen under monetized websites, and I’ve purchased some myself but I can’t say I did this one little change and boom I’m making $5000 from $500. I’ve never had that; it’s always been a grind.

I don’t get into arguments, I never put down any seller, ‘coz this is their baby. You don’t want to be derogatory; you might have to ask tough questions but that doesn’t mean you don’t do it in the friendliest manner possible.

 

You start to be respectful I guess. I know you mentioned the win-win scenario type thing and that’s something not many people have in mind, and they don’t think about it how both the seller and the back can walk away happy.

Yeah, I only do business that way; it’s just how I am. I want them to be happy at the end of the day. There’s been multiple times where sellers have come back to me and sold me their other assets.

I tell them right of the bat that I’m looking for a win-win, if you’re uncomfortable with the deal, just tell me you need more time, there’s no worry at all and I give them that space and I let them have the ability to back out and everything. And what you find is, they like you.

 

I’ve been outsourcing from the Philippines and I found that it’s not just the money; you have to be nice as well.  Little things like paying them on time pay them an extra hour for their work and give them a day off. And go that extra bit to make sure they’re happy. Whether they’re a partner, a seller or having a transaction deal with, it goes a long way and that’s the only way I’ve been able to keep the people that work with me. If you do it the way other way they’re just gonna treat it as like any other job, anything else that comes by that’s better they’re just gonna move on. 

That’s very true, if you find the right people absolutely do that. But still you can’t be afraid to let them go if they don’t perform.

 

Definitely, it goes both ways like if they don’t show you that same respect and appreciation. If they don’t show you that love back pretty much then we’re done, I’ll just go to the next person.

 

Let’s say we found a website we’re interested in, with the background check, you touched a point on the checking age of the website, the back link profile. Anything else that comes to mind that’ll definitely make you go for this website?

Some of things that I look for, you touch up on the age of the website, I like it to be several years old, at least 2 and honestly even that’s low. I want those older websites, they’ve been around for a while and established and have a nice history of running money. Because so many people will build something really quick and try to flip it. They flip it ‘coz they know it’s gonna crash and burn pretty soon. The older the better.

Also, if it has  a good trust flow so you can plug  it into majestic and look at the back links and the inker  text profile and make sure they’re not heavily spamming and that it’s not over optimized for 1 or 2 keywords,it might be branded or naked links to the website.

 

So what’s a bad back link profile? 

Say I was selling red cars, and you see a lot of links for an inker text  coming to the website, like 30-40% of the links coming to the website have the inker text of red cars. That’s a big red flag, because they’re way over optimized for that keyword. Google will pick that up, it’s not a natural link profile. And that’s what you’re looking for; you’re looking for natural link profiles. And a lot of them should just be the naked links, so just the link to the website going to the articles, things along those lines.

And of course where they’re getting their links from. One site that I ended up purchasing had hundreds of wiki links, and it has that EDU links and government links and it’s fantastic. You just can’t buy these links anywhere and so it adds a lot of value to the website because this type of site you don’t see often.

There are some instances where I might buy a website that it only peaks in November-December because of Christmas. But it’s been doing so for 10 years, yeah I’ll buy it. It’s been doing it for 10 years and it ranks well for those keywords and come Christmas when somebody’s looking for Cashmere socks, guess who’s gonna make a lot of money?

Then one thing that I look at is diversified income. So where’s that income coming from. Is it from just adsense, is it just from one affiliate product. If it’s just one affiliate product what happens the guy goes away, can it be replaced.

Is the niche evergreen, is it gonna be here in 5 years. Is it gonna be here in 10 years. So the industry or niche that it’s in, I don’t want it to be a fly by night hype going on. A year or two ago we had a lot of Teespring hitting really hard, that was like the hot flavor of the year. And then you have content native ads, MFA sites made for adsense, coupon sites went through a huge thing, flash gaming sites. So if it’s kind of like a really hot niche at that time, I wanna avoid it. Avoid it like the plague.

Coming back to the question you asked me, you brought up underutilized monetization methods. So if it’s just adsense on the site, is there a product or service you could be selling and that right there could double the income, possibly.

I look at the traffic stats, is it diversified traffic. What percentage is coming from organic vs social vs direct vs email and what country is that coming from. I’ve seen some “oh it’s 90% organic” and then you actually dive into analytics and it’s all from India and you’re like oh man this is a big red flag. So you gotta look at all that stuff, because obviously you want the traffic from Tier 1 countries.

 

Are there any industries or specific types of websites that you avoid?

I myself I don’t do adult websites, and I don’t like dating websites. If it’s not evergreen, I’m not really interested because why are you buying this website in the first place, right? And you gotta think of it like that. If I buy the website, am I gonna enjoy what I have to do to it, can I put it on auto pilot, what’s my exit strategy. Unless you can kind of answer those questions then one, you shouldn’t be buying websites but unless it fits in well with me I don’t buy it. I f you’re used to running like adult offers, by all means if that’s your forte. I can’t say I necessarily have any set criteria.

 

Do you find that you gotta really like the topic of the website and not just the monetization aspect before you get into spotting opportunity and working on it?

No not necessarily, that body grooming one was a pretty good example. I knew I could take that site and I knew I could make money for it, I knew that if I stuck out for another year or two, even if the monetization didn’t increase I’d be able to flip it. So I had my exit strategy already in mind, I knew I was going to sell the site, and I’d probably sell it within a year or two and that’s exactly what I did. I can’t say I loved to content or loved the topic at all but I saw a great opportunity at a great price. So I was there to take advantage of that.

 

For the back link profile is there a website or a tool that you use for it?

Majestic, 100%.  And you can use ahref and other back link tools, and you can always request google web masters access. And if they say I don’t have it, say go verify your website because google already has this information. It’s not like past analytics data, which is also very great, you want analytics access and then you want google web masters access ‘coz you will be able to see the exact search queries, you’ll be able to see the exact pages, you’ll be able to see the position. Like what do they rank for, and the average search position overall, and the back link profile it’s in there. So you’d be able to see all the good stuff, and be able to make a decision based upon a lot on that data. So you should always look at google web masters and look at analytics data.

 

Can you give some tips for someone that wants to start in this whole thing that doesn’t really have a big budget like $50000? What would be a good thing to do, let’s say they want to get into buying and selling websites, would you advice them to start doing it straight away or would you advice them to play around a bit with traffic sources? Just to get an idea on what to do.

I don’t want to tell anybody what to do, I’d say find something within your will house. I’d say that’s probably the more important or something that you think you could easily learn. Something that you believe you’re gonna be comfortable with. No matter what type, big or small website, a lot of the things, the same things apply. You’ll have to be wearing multiple hats, you’ll have to be the web developer for it, you’ll have to get the theme, have to learn to monetize, set up everything. I wouldn’t buy big if you don’t know how to do any of that stuff. Buy smaller, learn, don’t make major changes either. If you don’t know what you’re doing don’t make major changes. Make small tweaks, keep records of what you’re doing and just kind of learn the ropes.

 

What are your future plans? Do you want stay with website buying and selling thing, would you like to build your own website maybe, or stay in affiliate marketing?

All of the above. I’ll continue to push out offers; I have some of my own offers now too. I have affiliate offers that I’ll continue to build up. My biggest thing is, whenever I look at something now, this just where I’m at, and I look at something and say can it make me $10000 month net without me doing a lot of work. So once that’s et up and what it’s going and I pay whatever money I gotta pay to get it going, am I gonna make $10000 a month without having to do a lot of work and if the answer is no, then I don’t do it, if yes then I’ll do it. Not everybody is in that position; it’s just where I’m personally at now. So if there’s somebody out there who has something that’s really working well for them.  And they’re at $1000 net or $3-5000 net and they’re looking to scale it massively and they know it can be done but they don’t know how to do it , feel free and reach out to me.

 

Awesome.

 

Biggest thing I’d say is do your do-dilligence and I hate to say this but if you’re going to buy a website keep this in the back of your mind, the person is lying to you. I know that’s negative and I’m not saying that the person really is lying to you but have that mentality, and that doesn’t mean being mean or anything like that. But try to think how are they tricking me, how am I being conned. And if you have that at the back of your mind, you’re gonna notice more stuff, you’re gonna be like well these numbers don’t really make sense or how are they taking advantage of me. I’m just saying that and using that as a protection mechanism for you and that’s probably some of the best advice I can give you. Because there are a lot of scams out there, and it’s not always easy, some of these guys are really good. Just keep that in mind.

 

Do you find you’re still learning a lot with business in general?

I think that will always be the case, and if you’re not learning then you’re just not trying enough. You can always learn.

 

 

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