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With a title like that you would think this article is going to be all about taking the money you make from blogging and sticking it in shares or property or some other form of investment, and you would be right, but the investment method I’m going to explain to you today is not exactly typical. In fact I bet not a single blogger reading this article will have done what I do with some of my blog profits (feel free to leave a comment and prove me wrong though).
What am I talking about?
I’m talking about reinvesting the money you make blogging into web property, in particular buying websites that generate passive income.
I’ve long been a fan of flipping websites, in fact if you type that phrase into Google this blog turns up as the number one ranking article for the previous article I wrote, How To Buy A Website And Flip It For Profit. At the moment though, I’m not much of a flipper, more a buy, renovate and hold type of investor.
Let’s face it, most bloggers when they start out are broke. Chances are you don’t have a few thousands dollars lying around for investing in anything and as a result a low-cost start-up, like a blog, is a common pathway for a budding web entrepreneur to follow.
Blogs might not turn a profit quickly, but provided you put in the elbow grease and follow some principles (Blog Profits Blueprint anyone?) you will start making some money eventually. That’s exactly what I did with my blog, although I had the advantage of a nice salary sized cash-flow coming in from my existing web business when I started blogging.
There is an inherent risk when buying websites. I would say that buying a site and optimizing it so it makes more money is an “easy” way to build passive income (I’ll explain how it is passive in a moment) and it’s a much less labor intensive way to make money online than blogging is, but for most people it’s out of the question. You either don’t have the money or don’t know how to do it or you have too much fear holding you back. Starting a blog is a much less scary proposition for most people.
However, once you build a great blog and your income source is stable, why not start to experiment and build income sources that are not as labor-intensive as blogging? A blog cash-cow can be the perfect fuel for building a nice portfolio of web property which quietly makes you money in the background while you spend your days writing a blog and enjoying the fruits of your labor.
It might be stupid of me to reveal this since I’m creating my own competition, but the truth of the matter is that the web marketplace, in terms of online property, is full of bargains and there has never been, and never will be again, such a great time to invest online.
It’s like having a choice of hundreds of properties which, provided you don’t totally neglect or destroy them, are guaranteed to increase in value over time. The World Wide Web is a suburb with millions of people moving in each month. That’s some pretty crazy growth and people who own property in this market enjoy consistent gains as a natural run-off effect of that growth.
I know this for a fact because every site I have is organically growing without me doing much. Google continues to send more and more search traffic. Word of mouth helps to bring more people to my sites and while none of my web property are growing super quickly, they are all steady performers.
Best of all, if you know what you are doing, you can find bargains, property priced so cheap people who invest in offline assets like real-word property and real-world businesses, would be stunned when they see the figures for online property.
You can buy web property at about five times monthly revenue. That’s MONTHLY revenue. Okay, it might be harder to find bargains at that price but it’s relatively easy to find sites that sell for 10-12 times monthly revenue. That’s one year of income, so a site that makes $1,000 a month today costs you $12,000 now.
In most cases with a few tweaks and given the natural growth of the web, and provided you did some due diligence before buying your investment to make sure you don’t get a lemon, that $1,000 can be grown to $2,000 a month in a relatively short period of time. You can make back your investment cost within 4-8 months and from there you have a nice $2,000 a month profit center. Do that five times and you have a six-figure yearly income – a potentially passive income source too!
Any site that makes money can be a passive income source even if work is required to maintain it simply by setting up a person to look after it. So if you buy a blog that makes $1,000 a month, hire a blogger to keep content fresh and look after the place at $500 a month and you have a passive $500 a month income source that will continue to grow month after month assuming your blogger is doing a good job.
Alternatively you can look for sites that are driven by user-content generation. Sites like forums, social bookmarking communities and directories can function on the back of the people that already use the site, who create content, and the existing traffic coming through from incoming links and repeat loyal visitors.
Turnkey sites, like e-commerce stores that sell a digital product, function without you, converting sales through a web system made up of sales pages and perhaps email autoresponders, delivering the products through electronic distribution. There can be customer service needs, but of course this can be outsourced too.
There are plenty of types of sites out there that can be made passive or near-passive. It really depends on what style of site you understand so feel confident optimizing, and what your budget is.
For many of you reading this, blogs are a great option because you know how they work. There are many blogs for sale, the tricky part is making sure you can keep the content coming either by writing yourself or bringing on other bloggers. Buying a blog instead of starting a new one from scratch is another way to quick-start your professional blogging career and also teaches you the process of buying a website, which can be a very beneficial experience down the line when you go to purchase more online assets.
You only two things to get started:
Having a blog that consistently makes money is the perfect leverage tool to get you into web property. It’s takes some patience and foresight to make a decision to reinvest profits rather than spend them, but you will be glad you did in the future as your portfolio increases in value.
In the later stages of Blog Mastermind I’m going to teach my students how to buy and sell a blog/website, so if combining web property with blogging is something that interests you, please consider joining Blog Mastermind.
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