In November of 2019, private equity firm Ethos Capital announced that it closed a deal to acquire Public Interest Registry (PIR), which owns all .org domains. The deal sparked fear from nonprofits and other organizations that claimed the price of these domains would go up. It also concerned website investors and website flippers who can often own thousands of domains at once.
Whether one invests in a .org domain or a .com, investing in websites has become another trend in the pursuit of diversification. According to Inc. Magazine, by the end of 2013, every possible four-letter combination had been registered as a ‘dot.com’ domain name, but there are still millions of URL possibilities out there—not just in .com, but in .net, .org, .info, .biz, and other top level domains. And possibilities equal virtual real estate potential.
What is website flipping, and should you invest in virtual real estate?
Specifically, we are talking about buying and selling websites.
Back in the early days of the Internet, some people who bought and sold domain names did so in anticipation that someone else would later want those same domain names, and therefore would have to buy from them. This is known as cybersquatting—a questionable if not illegal practice. This is not what we are talking about.
We are talking about buying more than a mere domain name. Rather, we are talking about buying a domain name together with an existing website, developing it into a more valuable online property (usually with better content and an expanded audience), and then selling it for a profit.
There is a difference between building a website to promote or grow a company and website flipping, which can be compared to a private equity investment. In PE, a firm invests and purchases an active stake in a company, increases its value and sells it to a buyer or another firm.
Website flipping is similar.
If you’re into rehabilitating, you can buy a poorly performing website, turn it around, then sell it for profit. Or, you can buy a website that’s already making a profit, grow its potential and sell it for a higher price than you bought it.
You can also start from scratch. You can buy a domain name, create a website and grow it until it’s turning a regular profit. At this point, you can try to sell the website for some multiples of your established monthly profit.
What we are describing is not that much different in concept than a real estate developer deciding between new construction or rehabbing. The difference is, most people have at least a passing knowledge about the opportunity to make money in real estate in these ways, just as most people understand the basics of franchising. Heck, there are entire trade shows and magazines devoted to trying to persuade you to buy the next hot franchise. But did you even know that there is a cottage industry focused on helping people buy and sell websites?
There are plenty of sites that deal exclusively with such virtual real estate, acting as marketplaces for buying and selling websites. Often these are known as website brokers, which can evaluate your website and help you sell (or buy), just like a real estate agent.
Some helpful sites include:
The fact is, there are many websites out there that simply aren’t run as well as they could be. For the savvy marketer or web designer, investing in virtual real estate and becoming a website flipper represents something worth considering.
Just try to steer clear of .org domains for a while.
[Editor’s Note: To learn more about this and related topics, you may want to attend the following webinars: Setting Up a Website and Buying and Selling IP. This is an updated version of an article originally published on February 10, 2015.]
Freelance business writer. Wrote freelance for AIMkts
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