– Quit my day job
– Put 500K into my company to buy more blogs!
I know that there are tons of ways to make my million profit (invest in stocks, bonds or CDs, buy a franchise or finance private mortgages). Most people would think that investing their money with a financial institution or buying an annuity would be among the safest ways to:
a) Protect their capital
b) Create a revenue stream
However, I think differently. I think that buying more financial websites would insure a bigger cash flow and that my original capital would grow even faster. Why? Because blog prices are going up!
Once upon a time…
A scant few years ago (around 2008-2009), financial blogs and most websites were selling at 18-24 times the monthly income multiplier. Therefore, a blog making $500/month would sell for $9,000 to $12,000. If the site was smaller or if you were a fierce negotiator, it was even possible to buy blogs for 12 times the monthly income. Back then, we made a few purchases:
Intelligent Speculator (our first purchase)
Gather Little by Little (which we sold back a year later)
The Dividend Guy Blog (2010)
The market was good for buyers since there weren’t many (actually, we kind of started the trend along with the guys from the Money Crashers). Most revenue streams were unstable and nobody knew if online income would continue to grow in this specific niche. We had decided to take the jump and see what would happen… this was probably my best financial move ever.
Now the game has change – There are more players
As with any other good financial opportunity, when it is a really good one, you will see other people jumping into the crowd. We are now a few people in the game (I won’t disclose the others as I don’t know if they want to be “public”). So what does stable revenue streams and more investors mean in any investing field? It pushes the price up!
This is what is happening with blog values. I have never been a fan of “appraisal site websites” as they use questionable algorithms with limited access to data in order to determine the value of your blog. This is why I have designed my own business model to buy blogs. However, over time, I had to make a few modifications… such as increasing the multiplier from 18-24 to 36 the monthly income as a base. The model can now go up to 48 times the monthly income (yup, 4 years!). This would obviously concern very solid and established websites (3 years or more, very stable and diversified income, etc.).
If prices are going up, is it the time to buy?
If I had more liquidity, I would buy more blogs in a heartbeat. Why? Because values won’t stop going up. We see huge websites being sold for 7-8 times the yearly income. I think we will see this trend affecting smaller websites in a few years.
After all, putting your money in an investment that will generate 25 to 33% returns annually is still pretty good. This is what is happening if you buy a website at 3 to 4 years the annual income. So in the upcoming months, you will be sure to see us putting more money aside in order to buy another website ;-D.
In the meantime, we will continue our focus on creating our niche websites. Our latest one, What is Dividend, is growing rapidly. Now I think I have found a great formula to create similar small money making machines ;-D.
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