AdSense Flippers Podcast Episode 3: Buying Killer Websites Without Getting Scammed

Justin:
Welcome to this 3rd Episode of the AdSense Flippers podcast. I’m your host Justin Cooke and I’ve got my co-captain here, my business partner extraordinaire, the man who’s working his fingers to the bone in transferring sites this month, Joe Magnotti. What’s up buddy?

Joe:
What’s up my men? I’m so happy to be on the 3rd podcast here. I feel like we’re on a role and ready to get started.

Justin:
Absolutely buddy! First let’s go over some updates, news and info and then we’re going to get into the meat of the episode. This week’s episode is specifically about buying websites, where to find them, how to find good deals and making sure you’re not getting ripped off. So, make sure you stick around for that. Last, we’re going to go into some of the ninja marketing tips and tricks that will help you grow your business and get you where you need to be. So buddy, let’s get into the updates, news and info. I’ve got some great information for you. First off, we’ve got our first iTunes review men. What do you think about that?

Joe:
I am punked!

Justin:
5 star review, it comes from Matthew Paulson, who says, “This is a great new podcast about building niche sites, the show is well produced and the hosts are entertaining. Keep up the good work!” Well, thank you Matthew, really appreciate, thanks for being a listener and for checking out AdSenseFlippers.com men. We love you. Next thing we want to say is Happy Thanksgiving to everyone. It’s a Wednesday night here in the Philippines, Wednesday morning for you. And by the time this show airs, it will be thanksgiving or after. So, I just wanted to wish everyone a Happy Thanksgiving here from the Philippines.

Joe:
Yeah. Happy Thanksgiving from me too and I am so excited to eat some turkey stuffing and pumpkin pie. I’ve been on this diet. I’ve been working out hard and I am ready to fill my gills to the brim.

Justin:
Dude, I’m stoked. I just started about 2 weeks ago on a nice little rabbit diet. And, yeah, I’m looking forward to some really good food, some turkey, some stuffing, sounds delish buddy. So, anyway, let’s move on to the next thing. We had a bit of a failure and I want to go over that with you guys and share, maybe you guys will learn from this a bit. We were pre-selling sites. So, we had a buyer that we want to run test case with, and he end up buying sites before we built them, we ended up building up the sites for him getting them earning and unfortunately, they’re all duds. So, we sold him 13 sites, pre-sale, created the sites, and at this point, they’re earning around $13,000 to $14,000 a month total for all 13 sites.

Joe:
Ouch!

Justin:
Pretty bad. If you compare that to the same sites that are built on August, on average, those sites are earning a little over $7 a month each. So that should be $90 a month or so which he’s not receiving which sucks. It sucks for John who is the buyer. But, as we agreed, it was a test case for us, we want to test out the pre-selling and obviously it didn’t work out, we’re going to make sure that we give him equal value in ad sites to his library to make sure it works out for him. But I think that’s not the route we want to go in the future.

Joe:
Yeah. I agree because the thing is that, it’s better from a buyer’s perspective to have revenue, Google Analytics, all these things available to them, before they make a decision to buy our sites and we feel more comfortable with that, they feel more comfortable with that and everybody. It’s an all-around better deal.

Justin:
Yeah. I feel it puts too much risk on the buyer where it’s that risk should ultimately lie on the seller. It’s our responsibility to get the sites up, earning, traffic, etc. And if that’s not happening, that shouldn’t be the buyer’s risk or issue. You know what I mean?

Joe:
Agree.

Justin:
Okay. Now for some great news for our listeners, we’ve got a website giveaway. And if you’re listening to this podcast, you haven’t had an opportunity yet to buy one of our sites or just haven’t pulled the trigger, just for listening to this podcast, we’re going to give you an opportunity to own one of our sites for free. How does that sound Joe?

Joe:
Sounds pretty awesome. I hate giving away things for free but I love the fact that we’ll be generating some interests off of this.

Justin:
So here’s the deal. Here’s how you can get one of our sites. All we need you to do is become a reviewer and a subscriber of our podcast in iTunes. So go check us out on iTunes, make sure you subscribe and then give a review. And anyone that gives a review and subscribes in the month of December, will be in a drawing to win one of our sites and we’ll be giving that site away in January. And this is a site that’s up, earning, ready to go, right?

Joe:
Yeah! And I will work personally with that person on the transfer, I’ll handle all the migration stuff just like we do with a real customer, walk you through the site, let you kick the tires, everything like that.

Justin:
So, cool! Check it out guys, make sure you give us a review and subscribe. We’ll be happy to hand over a site to you and you can let us know how it worked out.

****The Adsense Flippers Podcast****

Justin:
And now we get into the heart of this week’s episode which is specifically about buying websites online. Now, full disclosure, we’ve had one major purchase with Twitart.com on Flippa and we’ve had several private purchases where people came to us with some websites that have real promise that we decided to build out. So, our experience is based on those purchases and also, as a seller, we’ve done a ton of transactions as sellers and made quite a bit of money by selling sites to buyers. So we know what they look for and what they like. Now, we’re going to get into briefly the reasons and some of the benefits that people buy websites online. One of the reasons they do it and a lot of buyers come to us because they have more money than time.

Joe:
Yeah, Justin. We see professionals come to us all the time, doctors, lawyers, engineers, people who have full-time jobs, they want to get involved in the passive income game online but they need a head start. And they basically have more money than time like you said So, they’re looking to get started and they know that by buying a site that already generates revenue, already has traffic, is already built out, they don’t need to get into the outsourcing game, they don’t need to build a team, they don’t need to come with the process. They buy a site, transfer the sites to their name, to their hosting account, get the AdSense revenue, whala!

Justin:
One of the keys I think though is that they have to have some experience with websites. We do have some buyers we come across that want to buy a site but don’t even know how to build one, don’t even know how to put AdSense codes on a site and I think that’s key. Simply buying a passive income earner and then taking it over, you’re going to be fairly unsuccessful if you just expect that to work. You don’t want to have be figuring it out or figuring out the basics after you buy the site. You want to know that beforehand. I think that’s key. A lot of buyers don’t know that.

Joe:
Yeah. I would also say, you don’t want to sell this to your grandma, right? I’m not advocating that someone that doesn’t have any experience online that struggles with technology can just buy a site and passively sit there and make income.

Justin:
One of the other great ways to buy a site is to take a website that’s currently monetized one way and to build it out in a different way. So for example, taking an AdSense site which we know is one of the lower forms of monetization and having a clear idea on how you’re going to make money with it. For example, if you buy an AdSense site that sells a particular product, you may convert that to an Amazon Affiliate site or you may have some info product that you know will convert well. All you have to do is put that info site as an affiliate and you can double, triple revenue. So a lot of people are buyers of smaller sites or AdSense earning sites and they turn those into affiliate or info sites and make a lot more money.

Joe:
Yeah. I would also say, from an engineering standpoint why I would want to buy a site is to reverse engineer what someone else’s doing. So, you see a site on Flippa that’s interesting, “Oh, it’s a video site. How do they do that? How are they making money?” Go ahead buy that site, figure out the process they use to create that and then you can create the sites yourself.

Justin:
Yeah. I love that idea too. People like Pat Flynn on smart passive income, he has niche authority site and he kind of steps you through the process on how he did it but some people are not quite as open with that. So what you can do is pick up one of their sites and look at how they did it, look at what their internal link structure is, what kind of content they created, and then recreate that process over and over again for huge profits. So I think that’s a big benefit in buying a site, especially a well-earning site. Now, while there’s some clear benefits to buying websites online, there’s some pretty clear negatives as well. We want to make sure we cover that because if you are considering buying sites online, there are a few things that you’re going to need to know. For example, buying a product or service site that you’re completely unfamiliar with and can’t support is a really bad idea.

Joe:
For instance, your product site was something about car parts and you don’t know anything about cars, I would probably stay away from that.

Justin:
Or let’s say I was buying an AdSense site and it happened to be about baseball and I know nothing about baseball, it’d be really hard for me to add content or even pay for content, get it back and know that it’s really good information that I’m putting on the site. Another thing you want to look out for is buying AdSense sites without an AdSense account or a clear path for alternative monetization.

Joe:
Yeah, you know Justin, we see people buy our sites once in a while who don’t have an AdSense account. We have to walk them through the approval process and some people, no problem, they get approved in a couple of weeks and they’re up and ready to go. But, in the meantime, the site’s not making any revenue, those ad blocks are simply blank and they’re really missing out. So, you make sure to have your AdSense account approved before you go into purchasing and buying AdSense sites.

Justin:
Also, it’s a really good idea. I see people buying, let’ say, 15 X or 20 X or 25 X. If you have a clear path to better monetize that site and you know that with that ClickBank products or that Amazon product, you can double, triple your income, you’re cutting your monthly break even in half, right? Having a clear path to monetization is a really good idea to buying a site. And if you don’t have that, you may want to think twice about purchasing. Another thing you want to do is start out small because I see a lot of people that go, “Oh, I want to buy a $2,000 a month site. I get all this great passive income.” But if they’ve never owned or run a site that large, how are they going to do Joe?

Joe:
Very badly. We had a friend who sold a site, a travel-based site for $12,000 on Flippa and the person that bought it didn’t know anything about travel, didn’t know anything about running a site, and wound up running the site into the ground because they really just didn’t know how to run it.

Justin:
Yeah. So you’re much better off starting small and working your way up. If you have some experience at building sites, you already have some experience with smaller earners. Don’t go for the big earners yet until you’ve actually built one from a small earner into a big earner, you’ll much better understand the process. One of the other prongs with buying sites you need to be careful of is that there is some time required with any purchase. Some require more time than others. So be aware of that when you’re looking at the auction or you’re looking at whatever it is that you’re looking to buy, be aware of the customer service time included, be aware of how much time it’s going to cost to work on the different products or services that come with that site.

Joe:
Yeah. And I would say that the more complex the site is, the more complex the service or product the more time it’s going to take. So make sure you keep that into account when purchasing a site. We see people that get involved, especially in service type sites that didn’t know that they’d have to answer customer service emails, that didn’t know they’d have to use other things on the site and they wind up spending more time than they really make.

Justin:
Yeah. I’ll give you a great example. Let’s say you’re looking to pick up an SEO site and it’s a link building site, right? Make sure that you have the time to either do the links yourself or you have someone that can do it for you and handle the customer service. Otherwise, you’re going to be stuck emailing back and forth or Skyping back and forth with all these clients, especially if they’re like $50 or $70 packages, that maybe way more time than you actually want to put in. Another thing to be careful of and I want to mention this is that, if you’re buying a site, make sure you clearly understand who your provider’s going to be. So, going back to the SEO and the back linking packages, make sure that when you’re buying it you have someone that can provide that product, that service for you on your own. Sometimes people buy websites and they end up picking up the same, let’s say, link builder for the site and that seller happens to be providing the link. So, as soon as they buy the site, they then raise the price on those links, costing you a lot more. So your profit margin is then cut down and you’re going to lose a lot of the revenue that you thought you were going to get.

Joe:
So let’s talk a little bit about where to buy sites. Obviously, there’s Flippa, it’s the largest marketplace out there, there’s plenty of buyers, there’s plenty of sellers, there’s plenty of action going on, it’s in auction format so you can find some good deals once in a while at a low multiple compared to revenue. But there’s also plenty of other places to buy.

Justin:
Yeah. You can look at places like, Ebay.com, although the selection is much more limited or you can look at places like the Warrior Forum as well, they do have a sites for sale section. Now, one bit of warning, we did have a previous buyer of ours with AdSense Flippers that purchased our sites then emailed us later on and said, “Hey guys, found the Warrior Forum, found the WSO section or Warriors Special Offers section and found some great deals on site that are cheap, cheap, cheap to have built out for me.” A couple of months later I see the guy unsubscribe from our email list and I emailed him ask him what was going on, what happened, he said, “Oh, my AdSense account was suspended. Based on the sites that I’ve purchased, they were sending sketchy traffic to my websites and I end up losing my AdSense account.” That’s not an uncommon thing. There was another thread going on where this guy was offering an unbelievably good deal on WSO. So he was selling sites that were guaranteed earnings that were way lower than we would feel comfortable and so it didn’t really make sense for me as a seller, it didn’t make sense why I wouldn’t just keep those sites that sell for such a low multiple. So I followed along the WSO and it was contracting it out. And I did decide to warn people a bit ahead of time. Ultimately, a bunch of people had their AdSense account suspended because what the guy was doing was sending sketchy traffic and clicks to those sites to guarantee the earnings for a few months. So, ultimately, AdSense is very against that and shut down their AdSense accounts.

Joe:
Yeah. That’s what I would say in general Justin. Private sellers, you really have to be careful with them if you don’t know them at all. That’s the good thing about Flippa, EBay, buying on one of those things, at least you have the ability to look at their feedback, look at their history, contact them, that kind of thing.

Justin:
Now, private sellers, we can be considered private sellers but we do it on kind of a larger scale. Another thing you can do is, if you see a site and a niche that you’d like to purchase, contacting the buyer directly can do wonders. You can contact that buyer through the contact us form or emailing them directly and trying to figure out a price. Now, you have to be careful because sellers, especially for niche sites like that, they may consider that site their baby. So, a lot of times, they’ll put up much higher price tag on it than the site’s actually worth and this is a case on a regular basis with any seller where they have a site and they love it and they don’t want to give it up for just anything. But, when you come across those sellers that kind of moved on, don’t really even look at it anymore or don’t even have the site monetized, you can get a stellar deal, pick up the site, monetize it and make a killing.

Joe:
Alright, breaking away from where to buy sites, let’s talk a little bit about how to buy sites buddy.

Justin:
What you’re going to need to do is have clearly defined goals on your purchase. So for example, maybe you’re really into ecommerce and you want to buy a site that has products, that’s great. So you know you’re looking for a particular niche. Maybe you’re not great at customer service, you don’t have the time to deal with that, so you’re going to want to avoid sites that don’t have customer service setup or you don’t have an outsourcer that can handle that for you. You’re going to want to avoid those sites. Maybe you’re not very technical like me and like you don’t want to have to deal much with the site itself, so you need to look for a site on WordPress for example. So if you go into buying a site with those goals and those requirements already in place, you’re going to be less lured into one that you think is a good deal that is probably outside your area of expertise.

Joe:
Yeah. I would say, write those goals down. That’s a good way to start and it leads into the next thing that we’re going to talk about which is budget. So, make sure to write these things down because it’s easy when you get on these auction platforms like Flippa or EBay, like Justin was saying, you get distracted, you see a deal, you say, “Oh my God” but it’s outside of your box.

Justin:
Yeah, buddy. Determining your budget beforehand is key too. You don’t want to go on there and go, “Oh, I found this, what I think is an amazing deal. It’s got a great multiple. But it’s way, it’s a much larger site and the site earns much more than anything I’ve ever dealt with before.” That might be a bad purchase for you. So you’re going to want to make sure you stick to your budget when you go in so you don’t go outside of that and get lured in by what you think is a great looking site.

Joe:
Right. And most sites are based on multiple of earnings if you don’t know that. AdSense sites typically go for a 15 to 25 times monthly earnings, ClickBank sites for 8 to 10 times monthly earnings.

Justin:
I would say, if you see a site that’s going for well below that too, it’s always a sign to spend a little more time checking that site out, so for example, our AdSense sites typically go, from anywhere from 15 to 25 X monthly earnings. If you see someone that’s regularly selling at, let’s say, 7 X, what’s wrong there? Why are their sites selling for 7 X? Is it an amazing deal or is there something sketchy about the seller that you need to look in to?

Joe:
Yeah. It should send up red flags especially if they have completed auctions at such low multiples because there’s definitely something wrong there. So buddy, tell me, how should I avoid getting scammed when I buy a site?

Justin:
Well, honestly, it’s pretty easy to get ripped off with all the sites that are out there. If you look at a place like Flippa, there are a ton of sites available and there’s a lot of them that I think are a little sketchy. We’re not going to get in to like their obvious scams, those should be pretty obvious to you when you come across them as well. But there are some tricks that some of the sellers will use to kind of hide some of the things that it don’t want you to see and we’re going to get in to that. So, one of the obvious ways to check out a site and make sure that that auction is going to work for you is looking to see and make sure the traffic and a the revenue ratio add up. So a lot of times, you might see a site that’s getting very little traffic but has a really high revenue claim. If it’s completely outside of the box of what you know to be acceptable or average, you can take a look at some of our previous Flippa sales to get an idea for AdSense. But if it’s way outside of what some other people are selling at, selling for, that may be an obvious problem.

Joe:
Yeah. I would also say, if they don’t claim paid traffic in the auction but they’re using it and you can check this out by checking the Google Analytics that should definitely send up red flags for you, we don’t use paid traffic for our sites. But some product sites do use paid traffic and it is valid but they normally declare it in the auction.

Justin:
A great thing to look at if you’re looking at paid traffic is to look at the analytics and see what the top keyword term is. If that site’s not ranked for that keyword anywhere, there’s a very good chance that they’re using paid traffic to the site. So, if the seller did not disclose that paid traffic in the auction, that’s an obvious sign of something being fishy. Also, I will say this to, is that paid traffic, especially for like product sites, can be great. If they’ve got paid traffic and it’s a profitable process, if they’re using AdWords to make money, all you have to do is scale it up from there and you can make considerably more. So, don’t be scared away with paid traffic but make sure they’re disclosing it in the auction. Another thing to look for is whether or not the auction numbers match. For example, if they’re claiming this amount of money but somewhere else they’re claiming a different amount of money, there may be something off there. Same thing with the traffic, if they’re claiming traffic but you look at the analytics and it’s off, there’s something wrong there. If they didn’t take enough time to make sure they got those numbers correct, you may want to think twice about working with that seller.

Joe:
Yeah. And talking about sellers, if there’s no research available about sellers, you definitely want to think twice about doing business. We don’t even do business with people that email us and don’t tell us anything about themselves, whether they’re a customer or a vendor.

Justin:
Yeah. We get that all the time with Try BPO at our outsourcing company and also with AdSense Flippers where someone contacts us from a random Gmail account looking to do business, if they’re not willing to share who they really are, I want nothing to do with them and if they haven’t, by the second or third email kind of explained who they are so I can look them up and find out more information about them, I’m done. I’ll either tell them, tell me who you are or I’m not doing business with you.

Joe:
Yeah. I think that leads into our last tip which is slimy sales tactics, big projections, this kind of stuff, where people say, “It could has the possibility to make a million dollars a year” don’t fall for this kind of stuff.

Justin:
I love that man. I watch your show called Shark Tank, Joe. Have you watched that men? I told you to check it out.

Joe:
Not yet. It’s on my list.

Justin:
Okay. So here’s the deal. Basically it’s 4 entrepreneurs or people that are looking for investment for their business or potentially to sell their business and they walk into what’s called the Shark Tank. So there’s a bunch of investors at the table and oftentimes, these entrepreneurs think their business is worth way more than it is based on projections. Well, next year, we should do this much, the next year after that, we should sell this much. Well, that doesn’t mean anything. To an investor, they don’t want to know what you did yesterday, what you did last week, what you did last year , not what your plans are for the future and it’s the same thing if you’re planning to invest in a site. It’s going to be based on what they’ve done previously, not what they’re doing in the future. Anything they’re doing in the future as a buyer should be your advantage. They don’t get to claim that as where their business is now, you get to claim that as potential for you in the future. So you don’t want to base a value based on what they claim their projections are for the future. And with Slimy sales tactics, Joe, there’s no reason for that. I get kind of, I hate that type of stuff, the long form sale stuff, the you need to buy it now or it’s going to be gone and you’ll never have a chance at

Joe:
The little ticking clock that says, “Oh, if you don’t buy in the next 3 hours, the price is going to go up by triple.”

Justin:
Yeah. So don’t be sucked in by that kind of thing, don’t fall for the slimy sales tactics. You have time and there are plenty of websites out there. Make sure you’re getting a good deal. Make sure you’re able to research the seller. And one of the things I do is I look for the seller’s info. I look them up on LinkedIn, I try to find their previous history, I’ll search in quotations for their name, I’ll search for any other business they’ve ever been involved in.

Joe:
Search for their username because sometimes people use the same usernames on different platforms. So, he might use the same username on EBay and not have a good reputation over there or vice-versa.

Justin:
Or search for their email address, that’s another really good one, you can look for them via their email address and see what other forums their on, maybe they’re on some Black Hat forum talking about how they’re scamming other buyers, that kind of thing. So, make sure you take a look and you really research the seller. And the more expensive the site is, the more research you should do.

****The Adsense Flippers Podcast Continues****

Justin:
Now up is our ninja marketing tips, tricks and our plans for the future. So one of the first things I wanted to explain is one of our tactics as a seller to make sure we get maximum exposure for our auctions. So what we do is we start all of our auctions off at $1 with no reserve and the reason for that is this. The more bids you get on your auction, the more exposure and the more action they’re going to get overall. So for example, we start our auction off and within a couple of hours, we get a $500 bid, we won’t accept that bid to start. In fact, we’ll wait until we get a $5, a $10, a $50 bid, so we can stack up a lot of those lower bids before accepting the $500 bid which we have a few days to accept. What that does is it gets us a lot more bids in the long run and gets us a lot more exposure and ultimately a higher sales price on our auction.

Joe:
That’s a great tips for sellers. I really suggest if you’re selling anything on Flippa, you go after that. As a buyer, you can also take advantage of that. And what you do is, if you see a site that you’re interested in an auction that you’ve betted the seller, you’re sure that this is going to be something you want to go after, go ahead and give a little bit of a higher bid than you normally would as your initial bid. Don’t get into the bidding war in the initial stages, go in there, give something right at the buy it now or right at 8 to 10 X the multiple.

Justin:
Yeah. If you know that a site should go for $1,000 and it’s a brand new auction and there are no bids on the auction, if you’re comfortable with the seller and you’re comfortable with the sites, go ahead and bid $800 for that starting bid. What you’ll do is you’ll keep a lot of other potential bidders out of the auction because they won’t be able to bid 10 bucks, 50 bucks and see if they can sneak in some lower bids. If that seller accepts that higher bid, it’s a great way for you to keep other people out of the auction and keep away the competition. Another thing you can do is you can contact sellers that are early in their auction or even 48 to 72 hours away from the end of their auction and have met their reserve. So what you can do is contact these buyers as a seller, there’s an area that’s known as a dead zone. On Flippa, when you first list an auction, you get a lot more views early on in the auction. And let’s say that my auction’s for a week, so I might get a lot of views in the first 24 hours and then it goes dark, it’s dead, I’m not getting any views, I’m not getting any actions, seeing nothing, right Joe?

Joe:
Yeah. This is a time when most sellers panic. They lower their buy it now. They look to sell their sites. They go, “Oh my God, I better contact my list and see anyone else will buy because otherwise, my sites is going to go for so low.”

Justin:
So contacting them directly during this dead time and offering to buy it now at a lower price than they maybe have set right now for their buy it now is a great opportunity to pick up some value. When we were first selling, we hit that as well and we have someone pick up I think a great auction for 10 X, I think those sites were earning about $150 a month. We talked to them a few months later, they’re up to like $250 to $300 a month and he only picked them up for 10 X that then becomes a 4 X deal. So, he got a good deal out of it, actually 6 X deal. But he ended up getting a great deal out of it because he did that and contacted us as the sellers during our dead zone in the auction. Another great idea is you can contact sellers of recently listed auctions, ask for the reserve and immediately bid either right below the reserve price or right above the reserve price. Now, a lot of times, we wouldn’t release the reserve if someone contacted us directly. The reason we wouldn’t release that is because we don’t want someone automatically bumping their bid up to right around the reserve. But you as a buyer can use that as a trick. So if you contact the seller and know what the reserve is and it’s a good reserve for you, go ahead and bid right below so that it still hasn’t hit the reserve or right above so that people may be less interested to start bidding on that auction.

Joe:
And again, this is to pin the field of possible bidders. People on Flippa, people on EBay, they search by price and if there’s an auction that has a high price initially, less people are going to find it.

Justin:
Yeah. One of our tricks, as a buyer, we make sure that you know your budget beforehand by making sure that you bid right below what you think it’s worth early, you’re going to knock out any other people that it’s out of their budget for so you’re thinning the herd as far as the budget pool. So that’s a great tip. I hope you appreciate those tips next time you’re looking to buy some websites online. Thanks for listening to episode 3 of the AdSense Flippers podcast. It’s been great listeners. We really appreciate it. Last thing I want to remind is, if anyone wants to win free website from us, all you have to do is go to iTunes, look up AdSense Flippers podcast, go ahead and subscribe and leave us some feedback and we’ll be happy to put you in the running for a free website in January. So check that out. Thanks for listening.

Joe:
Happy Thanksgiving everybody!