Here at the ol’ FU Machine (JUST STRAP IN AND FEEL THE G’S, BABY) we’re fans of investing in some obscure ish. We’ve talked about trailer parks, trailers themselves, buying a franchise or some other business, and a million other things that all have the possibility to make you money in a semi-passive way.
I’m a fan of the stock market. I just think there are better opportunities if you think a little more creatively.
The logic goes something like this. The smaller a stock, the more inefficient the market. Nobody wants to but little obscure stocks like Village Farms, no matter how cheap they get. That’s why those stocks can get so cheap. If we get even smaller and look at businesses that don’t even trade on the stock exchange, we’re bound to find some bargains.
With that in mind, let’s take a look at another small business you can put money into. Let’s talk about investing in blogs, which can be a surprisingly profitable endeavor.
Let’s start with something to get your attention, something that’ll make even the most cynical among you a little bit excited. Investing in blogs is surprisingly lucrative. Small websites regularly sell for one to two times earnings.
As Paris Hilton used to say, that’s hot.
Yeah, that’s right. A Paris Hilton joke. I should really start charging y’all admission fees.
There are a number of reasons why blogs trade for such cheap valuations. A small blog might only make a couple hundred bucks a month in very inconsistent income. Many are overly dependent on Google search results, only ranking for one or two popular items. If Google changes their search algorithm, much of the income may evaporate.
There’s also a lot of crap going on in the blog world, especially from a professional looking to unload an asset. They might divert traffic from a popular site. Or they might post doctored screenshots of earnings reports. I’ve seen websites for sale that say they’re making $500 per month from 200 visitors. Somebody without any experience in the sector might believe that; the rest of us know the seller is pulling a Bernie Madoff.
You analyze a blog just like you would any other business. How does it make money? Certain sources are better than others. Is traffic growing or shrinking? People are usually willing to pay a premium for a site with growing traffic. Can it be improved easily? Is the niche a good one? There are a million variables to consider.
Where to look
There are basically two places to look. We’ll start with the biggest, Flippa.
Flippa is the place to go if you’re interested in investing in blogs. It has thousands of websites, domain names, and apps available for sale at any one time. Most of the listings are crap, but there are a few good ones. Unfortunately, most of the good listings are more popular than a bisexual girl at the bar.
Let’s look at an example. Flippa, hook us up.
This is great. I actually remember this personal finance blog from 2012-13. She sold it to this guy, who’s then trying to sell it himself. It claims to do $376 per month in income, with the vast majority of that coming from sponsored content. Let’s assume that’s true. It’s a pretty reasonable assumption, anyway.
He’s got a buy it now price of $7,500, which is wildly optimistic. I predict it’ll sell for $3,000 or so, give or take a few hundred bucks.
A website like that one needs to stay at least somewhat active, or else it’ll slowly start to lose search traffic. You could either update it yourself or pay someone. A decent North American writer who has English as their native tongue will set you back anywhere from $25 to $50 per post. This guy claims he’s getting third world writers to give him content for $3 per post.
(I just looked, and the writing isn’t half bad. It’s lacking personality, but it’s very passable English.)
So if buddy is spending $20 per month on content and $20 per month on hosting, we’ll call his profit $300. So if we were to pay $3,000 for this blog, we’d be looking at a 120% annual return with not a whole lot of work involved.
Nobody likes you.
I’m not being snarky. I have a legitimate question.
Why isn’t all your money in these?
They’re risky, Italics Man.
You’re being well compensated for the risk though.
Have I mentioned nobody likes you?
Geez. And everyone thinks I’m the jerk.
It’s simple. I don’t want to have both my job and my investments tied to the same industry. But Italics Man makes a good point. Guys like me should be looking at investments like this. I already know the sector pretty well.
Wanna think bigger?
Flippa is the biggest marketplace for investing in blogs. Empire Flippers is much smaller, but they deal in much bigger, more mature websites.
One listing I picked randomly was doing about 200,000 pageviews monthly, generating about $6,000 in monthly profit after expenses. It’s for sale for $186,400. Assuming earnings stay about the same over time, you’d make your money back in about 2.5 years.
Bigger sites sell for higher multiples because they’re much steadier than smaller ones. It’s pretty simple.
But really, who has $186k kicking around to invest in a website? I’d have to be worth $10 million to even consider such a thing.
Let’s wrap it up
Investing in blogs can be pretty lucrative. I wouldn’t suggest one of you go out and do it without learning a whole bunch about the world of e-commerce first, but if you already have a good understanding of the sector, there’s definitely an opportunity there.