April 19, 2011, 5:00 am

Blog Price is Going Up – Is It The Time To Invest?

by: The Financial Blogger    Category: Alternative Income,Make Money Online
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blog priceIf I won a million dollars, I would do 2 things (in this order):

–          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)

Green Panda Treehouse

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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Comments

I think you’re right about investing in blogs. A crazy idea is one day to have a fund that does just that. All joking aside i’ve noticed blog values going up. A year or two ago a friend and myself created one and sold it for a couple hundred dollar profit.

-Ravi Gupta

by: The Financial Blogger | April 19th, 2011 (8:38 am)

Hey Ravi,

your site probably worth a couple thousand now… we bought Intelligent Speculator at 3 or 4K back in 2008. today, I wouldn’t sell it under 50K 😉

Maybe if you had kept quiet about your success, the valuations wouldn’t have gone up as much and you would still be able to buy cheap websites. 😉

by: The Financial Blogger | April 19th, 2011 (4:07 pm)

lol! on the other side, I can now sell my blogs at a much bigger price 😉 hehehe!

hmmmm….is there a bubble brewing in the blogosphere?

i do see valuations edging higher for niche sites as well – i wonder how sustainable the trend is – as well as longevity

I didn’t even know you could buy a blog. I’m extremely interest, and I am going to read so more on the topic. Thanks for your post.

I was thinking the exact same think Mike H.!

Why not raise funds, TFB? Why not borrow? If the return is that good?

Just out of curiosity, how does your time-to-money ratio look for this website check out with your niche websites? My guess is you will make quite a bit more off of your niche websites going forward relative to the little amount of effort they require.

I think this is fascinating. With traditional media outlets drying up–print, TV, radio, etc. Advertisers are hunting for new grounds…where are they? Blogs.

That’s a pretty good question! Actually, I don’t see a big market on niche websites for 2 reasons:
#1 the one for sale are sites that doesn’t really make money
#2 most successful websites are not for sale since they are requiring low effort and steady income… so I don’t see niche website being sold at large as compared to blogs!

by: The Financial Blogger | April 20th, 2011 (7:59 am)

@Evan,

we are already leveraged 😉

I’m actually doing the exact same thing, except i’m building the websites and blogs. All the websites i own consistently earn money with very little work. There is maintenance, but it can all be very easily outsourced.
The funny thing is that most people have no idea that this is a way to earn money.
Im not building them to resell, but for monthly income

[…] other day we went over the idea of blog prices going up. Are blogs the next investment vehicle for 2011? Over the past few years more buyers have emerged […]

It seems to me that running a blog is a labor intensive low return activity. I am perplexed at how you can run multiple blogs successfully and earn more than a modest imcome. Plus, isn’t the income incredibly uncertain?

by: The Financial Blogger | April 24th, 2011 (4:43 pm)

@Barb,

I understand that you may be worried by the stability of online income. However, after 4 years, I can tell you that it is not that “uncertain”. Actually, online income is as safe as your job income; we never know when we will get laid off… so as we never know if we’ll be making money online in 5 years… I guess I have just learned to deal with uncertainty!

It definitely is labor intensive and what I would call ‘non-passive income’ 😉

Wow, that’s exciting news to hear that blog prices are going up! These hot domain names are like blogging/internet real estate!