Eric Porat’s Expert Tips for Website Flipping: Part 2

How to get started making money from digital investments, the easy way.

Here at EricPorat.com, our goal is to share experiences and tips from Eric Porat’s two decades of successful digital investment. The mistakes he’s made, the successes he’s achieved, and most importantly, what he’s learned from all of it along the way.

As you may know, Eric Porat went from starting a website from scratch in 2005 to selling it three years later with over 70,000 monthly visitors. Since then, he’s bought and sold over 70 websites for over half a million dollars.

Long story short, there’s something we can learn from Eric Porat, especially when it comes to digital investment. Here is Part 2 of his guide to website flipping, Expert Tips for Website Flipping.

In our last edition, Part 1, we left off just as we were about to start talking in-depth about the three primary stages of website flipping. 

Once again, those stages are:

• Identify and Purchase

• Improve

• Sell

So now that we’re caught up, let’s dive right in! 

(For those of you who haven’t read Part 1, click HERE to go there now).

Eric Porat’s Tips: IDENTIFY AND PURCHASE

The most important stage is finding the right investment. The right website. If you don’t do that… well, you’re probably screwed from the get-go.

But how do you know a site is ripe for investment? 

Here are some key indicators:

Firstly, we want to invest in sites that are in industries or sectors which are both GROWING and EVERGREEN. Places where customers actively purchase products, news actively occurs, etc. If a given site is only targeting a temporary trend (i.e. a site revolving around fidget spinners) or seasonal items (Christmas decorations, Halloween costumes, etc.) it’s probably not very viable for growth. 

Eric Porat’s other main suggestion is that we want to invest in sites with a relatively aged domain. These sites rank faster and higher for given keywords in Google’s search algorithm, so they’re much easier to scale. A good starting point is to only invest in sites that have been online for more than a year, at a minimum. Older is always better!

Next, Eric Porat’s tips are that we want to make sure our potential investment has been generating consistent revenue (or at least traffic, if it isn’t properly monetized) for the last 6 to 10 months

We also only want to invest in sites that have a clean and authentic SEO profile, in other words, sites that have strictly used whitehat search engine optimization techniques. If the site under this domain has violated Google’s search guidelines, you’ll likely be penalized and find it difficult to rank highly in the future.

Of course, the site needs to already have consistent traffic from search engines and other reliable sources. It doesn’t have to be a ton of traffic (that’s what you want to improve) but it has to be consistent, organic, and reliable. A growing email subscriber base and/or a dedicated following on social media are also great signs, although these can also avenues things you implement yourself.

Most importantly, we need to make sure that there’s an opportunity to diversify and grow the site’s monthly traffic and revenue sources. If a site gets most of its income via passive sources and doesn’t require a ton of overhead and maintenance, that’s always a plus, too.

Naturally, this stuff is complex, and these conditions aren’t hard and fast rules. Think of them, instead, as guidelines. 

In general…

If you find a site that meets all these conditions AND you can identify any problems with its growth and how to fix them, then that website is a good investment.

Eric Porat’s Tips: IMPROVE 

Here we are. Step 2. This is where the legwork comes in. Here we want to improve our site from all angles so that we can make a major profit off a sale. 

The ways in which each individual website needs improvement vary, but some of the main ways we can improve a website are:

• Design
• Branding
• Technical Performance (mobile compatibility, UX – user experience, load speed, etc.)
• Profit Margins [see ways to improve profit margins below] 
  • Reduce expenses and streamline site function
  • Add new revenue channels to diversify the income portfolio
  • Increase passive income sources.
  • Optimizing the conversion rate of the existing revenue channels
  • Optimizing the existing traffic channels
• Traffic
• Building and growing website assets (email subscribers, social media pages, etc).

Then we want to do a little thing called SAO… and no, it’s not Sword Art Online, for you anime fans.

SAO stands for Streamlining, Automating, Outsourcing. You want to streamline, automate, and outsource as many of your website’s operations as possible to make it more viable for sale.

So there you have it. The ABCs for website improvement, in the same manner Eric Porat’s made his success. This stage can be as short as a year (sometimes even shorter) or it can be several years. It depends on:

1. How much work you are willing to put into the site
2. How bad of shape the site was in when you found it
3. What viable sale price you’re trying to achieve

Sure, you’ll have to pay for operations and such during this time, but since you’re also improving monthly income, in many cases by the time you’re ready to sell, you’ve already completely paid off the buy-in. What’s more, the monthly revenue is probably completely covering site maintenance and operations at this point!

Typically, once you’re at this level (the site is generating consistent monthly revenue above operating costs, traffic is diversified and consistent, and monetization options are varied)… 

It’s time to sell your site!

Eric Porat’s Tips: SELL

This is the final stage, and also the completion of the cycle because you’re now on the other side of the table. Your job is to find another investor who is looking to purchase a website (just like you were in Stage 1!)

The big question is… How much can you sell your website for?

There’s no fixed rate, of course. Eric Porat’s sites have sold for tons of different fees. A good general formula is to multiply your site’s monthly income by an integer between 20 and 50. This integer can increase based on various attributes (income diversification, optimization, traffic, etc.).

So if your site makes $2,000 per month through affiliate sales you could sell it from anywhere between $40,000 and $100,000, depending on how large the traffic is, how many different digital assets the site houses, and so on.

If your site has been around for longer than three years, it has the potential to sell for much, much higher, so be sure to wait until the fruit is ripe, in other words, before you pluck it.

When you’re getting ready for a sale, you want to prepare a few months in advance. Work hard to maximize profits and traffic before listing the site for sale with a brokerage or private/public marketplace. 

When you post your site for sale, make sure to create a detailed listing highlighting the strengths and opportunities which can benefit any potential investors. 

Then it all comes down to negotiation. Know your site’s worth, and don’t rush to sell if you think you can get more for it. You’ve likely put a TON of work into this website, so you deserve a fair payout. 

Once the deal is made, do the legal paperwork and receive payment, then hand over the site. That’s that!  

Once the sale is made, both parties do the necessary legal documentation and paperwork.

Standard practice in the industry is to offer a month of assistance to any new website owner so they can familiarize themselves with the site and how it runs. Be a good and fair seller, because word gets around. You want to buy and sell more sites, so you don’t want your reputation to get ruined. 

And… that’s that! You’ve sold a website!

But that’s not all the information you really need to know to buy and sell websites. Eric Porat’s story and experiences have a lot more to teach us.

Read Part 3 HERE to get an in-depth look at where you can sell your website and more importantly, WHY you should invest in a website.