SPI 707: How to Skip the Build Phase and Buy an Existing Website with Jared Bauman

SPI 707: How to Skip the Build Phase and Buy an Existing Website with Jared Bauman

Jared Bauman: Starting a website and getting traction with it takes time, six months, nine months, one year before you’re really getting much organic traffic. And then maybe several years before you’re getting measurable, substantial traffic.

So buying a website that’s already been established and already had a lot of that groundwork done, allows you to kind of fast track your way to the front of the line. Provided you don’t buy a dud and you buy a good website.

So yeah, buying a website is really great, if you buy a good one, if you buy the right one, because you can skip the line to get started. But then there’s also some risks because you’re putting more money down to buy a website than you would if you started it yourself.

Pat Flynn: Imagine waking up and starting a brand new website, but already this website is making money. Already this website is generating traffic. Already this website might already have an email list, and I’ve said already a lot, but let me get to the point already. And that is purchasing websites. Now, this is something that sounds very scary, but there’s a wide range of prices that you could purchase a website for that already has traffic and even is already generating an income.

And we’re going to talk today with Jared Bauman, who’s sort of a veteran in this space. He’s been doing this for quite a while. He’s been an entrepreneur for over 20 years, and we’re going to bring him on to talk about in today’s world, how one would approach buying a website, whether you want to buy it to flip by adding a few things to it, doctoring it up, making it great, and then flipping it for a profit, or turning it into an investment property, a property that you can add to a portfolio that continues to generate more revenue for you over time. And it just takes a little bit of money up front to make that happen. So we’re going to talk about that today with Jared Bauman you can find him at 201creative.com as well as we, we got some other websites to share with you, including a tool for checking your website for what you can do to improve its SEO ranking at the very end. So make sure to check that out as well. And @JaredBauman on Twitter. This is a super fascinating interview, and it’s going to get you looking at marketplaces, I will say, and you’re going to find that this might be a viable option for you if you don’t want to spend the six months to a year or a year and a half to then build something from scratch.

You could take something that has just a little bit of a need for some love and some creativity, maybe more articles, monetization strategies, and you can kind of fast forward your way there. So, here he is. Jared Bauman. Here we go.

Announcer: You’re listening to the Smart Passive Income Podcast, a proud member of the Entrepreneur Podcast Network, a show that’s all about working hard now, so you can sit back and reap the benefits later. And now your host, he still hasn’t gotten the Master Sword and Tears of the Kingdom yet. Pat Flynn.

Pat Flynn: Jared, welcome to the Smart Passive Income Podcast. Thank you so much for joining me today.

Jared Bauman: Pat, it’s an honor, a pleasure. Thanks for having me.

Pat Flynn: You know, you and I have been in contact for quite a while. I’ve always been sort of noticing a lot of the fun projects that you have going on. And one of the things that I know that you are into right now, which has always been around, but honestly, I feel like, you know, everything has changed.

And so I’d love to get your insight on how you are buying and flipping websites. You know, it’s sort of like real estate, but in the digital world. And I’m just so curious about this because there’s so many questions about, you know, how do you select one? How, what’s your plan? How long do you keep it for?

Like, how do you know if it’s going to turn out or not? Let me ask you like, why do this? Like, what’s exciting about this strategy for generating income online for you?

Jared Bauman: Well, there’s so many ways to generate income online and building a website is one of the more popular ones. I mean, dating back to some of the websites you’ve built and created and then either gone on to sell because there’s marketplaces to sell them, or you can just continue to grow them and earn money from them.

But as a lot of people will soon find out starting a website and getting traction with it takes time. If you’re going the route of trying to rank the website organically, like that can take six months, nine months, one year before you’re really getting much organic traffic. And then maybe several years before you’re getting measurable, like substantial traffic.

So buying a website that’s already been established and already had a lot of that groundwork done, allows you to kind of fast track your way to the front of the line. Provided you don’t buy a dud and you buy a good website. So yeah, kind of the juxtaposition like you talked about buying a website is really great.

If you buy a good one, if you buy the right one, because you can skip the line to get started, but then there’s also some risks because you’re putting a lot more money down to buy a website than you would if you started it yourself.

Pat Flynn: Right. And we’ll talk about what to look out for and what makes sense for a person and how much a person may need to invest and all that kind of stuff. Is buying and flipping websites the only way you’ve generated income online or kind of tell me a little bit about your backstory for people listening.

Jared Bauman: Yeah, no, no, no. I’ve been entrepreneur for 20 years now and kind of carved out, over the years, a bit of a niche in just online marketing. That’s how I’ve grew previous companies a couple of years ago.

I think four years ago, actually, I should stop saying a couple, four years ago, started a online marketing agency called 201 Creative and building websites on the side for us and earning money online was actually, it started off as just a way to bound, like load balance our team because when you run an agency some months, you know You’re writing a ton of content and then other months you’re not writing as much content. Some months you’re doing a lot of digital pr other months you’re not and so we would have this conundrum which most agencies run into where it’s like, what do we, you know, do we want to outsource a lot of our work, but then we lose control of it, but then we don’t have to worry quite as much about the monthly payroll and workload fluctuations.

We wanted to really control the process better, which meant having our own team members, but that meant some months, you know, clients come, clients go, different work orders come in, so it was a way to solve our own problem really was, Hey, let’s put people to use doing stuff that we’re already doing for clients, but doing it, building our own websites.

So we’ve been doing that for four or five years now. We’ve grown a couple of our own websites. We bought a couple of websites. We’ve sold a couple of websites. So yeah, this isn’t the first one we’ve done. The, the, the buying website that we’re going to talk about, but we have, you know, a bunch of others we’re working on.

Pat Flynn: Really awesome. Well, thank you for that. And I think that’s a genius idea for agencies to consider we have a lot of people who own agencies and are a part of agencies who listen and, you know, supplement the income with stuff that you’re already doing for clients for yourself too. It’s so funny, it almost seems like obvious and just, it adds more value to the company and some safety nets, which is, which is great.

So let’s talk about buying websites. It’s something I’ve always been interested in. And I don’t know if you know this Jared, but I once bought a website myself back in 2011 cause I had heard about it and I was like, Ooh, like I like to get my, you know, hands and everything. And then I just, I just went in blind, kind of, I had no idea what I was doing.

I bought it. It was GolfTipsForBeginners.com. Okay. And I was like, I’m going to revamp this site. So I changed the WordPress theme. I put AdSense on it and just kind of left it on autopilot. And you know, I made like 50 bucks a month from it. And after, you know, three and a half years I recouped the cost of what it was and I was just like, Oh, that, that wasn’t that exciting.

What did I do wrong? Like, what’s the biggest mistakes that people make when they get into this kind of thing? Cause it sounds, it’s super awesome to, okay, I could buy a website, could do a few things and then resell it for more. That sounds, that sounds great, but I tried it and it just, I don’t know. I did it wrong, I guess.

Jared Bauman: Well, there’s a lot of ways to do it, I mean, wrong. I’m using air quotes for the people who are listening. I mean, it, it, it starts by kind of coming up with what your goal is. A lot of people will buy websites with the sole goal of just trying to flip them, you know. And really the best way I think listeners can get their mind around it is think about maybe a friend you have who does real estate for a living. Like buying websites is a lot like buying real estate. You can buy a piece of property that has good bones It’s in a good up and coming market and you can make some repairs and fixes to it and then flip it. And that’s a model right or you can like buy a website as more of an investment property. And you buy it because you see that it’s in a good neighborhood and you see that it has good bones that that you can build on but with a long term goal of turn it into a rental property that every month someone’s going to pay you to live at and you can slowly own more of it and slowly put up, pay down the mortgage and exit.

So buying a website is very similar. Start with your goal. Do you want to flip a website and make some quick cash on it? That’s going to change what you look for. Versus if you want to buy a website that you’re then going to grow and hold long term. Now, some of the strategies are the same, right? Like you want to get it to increase traffic, you want to increase the amount of money it’s making, but I think that’s one of the key things is to start with is do I want to hold on to this long term?

Because in that case, you might have opted for a website instead of just like some golf website that you weren’t really sure about the long term potential of, you might have really done a lot more research. However, if you’d gone in with like a quick plan of attack to say, Hey, this website’s under monetized.

It doesn’t have any ads on it. It doesn’t have any good affiliate offers. Let’s do this, this, and this with a really clear plan, maybe six months later with a lot of focus that could have been a good buy for you. You could have sold it for maybe double what you paid for.

Pat Flynn: Yeah, that’s smart. I think, I mean, this is always the answer when it comes to things.

It’s like, well, why, what is the goal? What are we trying to do here? And that then you reverse engineer kind of the process and the research leading up to that. So I like the idea of considering a website as an investment, one that you have in a portfolio, for example, that can continue to stack on other ones that perhaps you add in over time.

Do these websites that we look for to build a portfolio in this way, does it have to be something that I’m an expert in or a passionate about or what’s the basis for even deciding what to look for?

Jared Bauman: So more and more, it, it really helps if you have either an expertise or a passion or a curiosity about it.

I mean, that’s not to say that you can’t do really well with a website that’s in an area you know nothing about, but at the very least, I think you have a curiosity, like maybe, you know, you don’t own a dog, but.. you know, you start researching a dog because you and your family want to get a dog. So maybe that’s a good angle to go after.

You might not be an expert in that dog breed, but you’re like, I’m going to buy this. I’m going to buy a dog breed like this. What a great way to document my journey with a website. Right? So I think that to some degree, no, you don’t have to, but there’s so much more value, not only in terms of what Google wants, but in terms of really what readers want on like experience and on what people are connecting with a brand, you know, I mean, we’ve talked about your, your Pokemon, YouTube now huge brand, right? And it really started out of the same thing. Like you weren’t an expert in it, but you had a curiosity for it. And so I think at the very least, a curiosity is going to be the most important baseline, although it’s not a dead on requirement.

Pat Flynn: How does the existing audience and, you know, email list and even connection that the current owner has with that brand matter to you coming in fresh and deciding whether or not to move forward with that. Like, does that I would imagine that, for example, like a personal brand or one that’s more tied to the creators is a little bit more difficult to get involved with because you’re this fresh face coming in new audience might respond in a not so great way and, like, are we even entertaining those kinds of options or not really?

Jared Bauman: So that’s a good question. I would, I would get a little detailed on it because I think it’s totally possible. My first company I started was a photography studio and it had my name on it. It was Bauman Photographers and I sold it and it was not a problem, but I was able to sell it even, and by the way, the company’s still around.

It still has my name on it and no one really cares, but I had kind of unwound myself to where it was a brand name at that point, and even though I had started the company, I wasn’t the person everyone talked to. I wasn’t the only person there. And so unwinding that and making it so that the brand wasn’t just tied up around me, made it a lot easier for the new owner, right? So on the same token, like how do you determine if that’s the case? Well, I mean, one tip would be to fire up Google analytics and if they’re getting a lot of traffic from organic searches, that means that it’s not people like directly searching for the person’s name if they’re not getting a lot of direct traffic, you know, if they’re getting a lot of social media traffic, look into what type of social media traffic is it from their own Facebook group where they’re like a driving force or is the fact that, you know, the topics that they talk about are getting pinned a lot in interest.

So you can kind of start to separate how valuable the person’s brand is from the website’s brand itself.

Pat Flynn: That’s really smart. I like that. Now, in order to get access to their analytics, you’d have to, you know, have a conversation with them at least and kind of get in contact, right? You can’t find out necessarily all that information before you reach out and determine whether or not it’s of interest to you, right?

Jared Bauman: It’s part and parcel that you get access to things like analytics and financial data. When you’re serious, when you’re a serious buyer. So typically it’ll be like, I’m interested in this. Whether it’s a private deal that you just kind of work together on or whether it’s more of a public, like marketplace deal, and then once they vetted you as kind of a viable person to potentially buy it, it’s really commonplace to get access to all those details you need to make a decision.

Pat Flynn: How do I not get scammed in this situation? You know, like if somebody’s like, yeah, I’m making this much money. It’s like, like they can make up any numbers. And how do we verify that? Is, is there a way to make sure before we put our money into something like that?

Jared Bauman: So there’s no really like official way, you know, it’s not like requesting tax documents from the government or something like that.

I mean, I’ll just tell you the most common ways people do it. I’m not sure that they’re the best ways and they’re certainly not bulletproof, but like to verify Amazon affiliate income, most people will make you take a video of you actually browsing around and showing and navigating through the different reports in your Amazon account, just to verify that like screenshots aren’t being fabricated or something like that.

Yeah, that’s actually pretty smart. So, you know, like stuff like that is kind of the level that you typically will want to go with. I mean, this is a bigger topic. But when I, when I bought my first website, it was from a marketplace. I bought a couple of websites from marketplaces. I haven’t bought a website from a marketplace in a couple of years now, because as I’ve become more involved in the community, you kind of start to find opportunities with private deals or just start to work on those yourself.

And so there can be a little bit of a different level of trust once you’ve already established a little bit of relationship with someone, obviously that, that makes sense, but there’s lots of ways to, to still do a pretty darn good job of verifying that it’s accurate.

Pat Flynn: Do you recommend a person check out those marketplaces like is that still a good viable option for seeing what’s out there and sort of discovering what websites might be of interest.

Jared Bauman: If it’s your first website to purchase I would recommend only going through either a reputable marketplace or buying from someone that you have somewhat of a personal relationship with. That makes sense. Because like you said There’s a lot of ways to mess it up and not saying you can’t buy a dud through say an Empire Flipper or not saying you can’t buy a dud from someone who you know, but at least at the very at the very least there are some measures they go through to make sure that the website is viable enough to even be in their marketplace, right?

Like they don’t want a lot of bad purchases happening. They don’t want anyone getting scammed and stuff. So and if you know the person, hopefully that will also add a level of reputability to the purchase. Then once you get, you know, once you’ve done a few and you’ve learned, you’ve learned some lessons on what to look for and stuff, then you can you can kind of start to maybe go off a little bit on your own.

I was lucky because we audit a ton of websites at my agency. And so I get to, you know, see like, Hey, somebody will come bring us a website and say like, okay, what’s going on? What’s wrong? Why is it not growing? And we’ll ask a lot of questions. And so in asking those questions and then seeing what happens, we get to like, see a lot of things that maybe a lot of people don’t have access to.

So I was a little more comfortable moving away from a marketplace, but marketplaces do a really good job of kind of, you know, easing you into that process by doing some high level due diligence first.

Pat Flynn: That’s cool. Random thought. Do you ever have a client who they’re just like, you know, they’re not into their website anymore and you’re just like, you know what?

Maybe we could buy their website because we see a lot of things that might be able to be done with it. And have you ever bought like a client’s website off of them?

Jared Bauman: Actually, our most successful website purchase is exactly that. They hired us to help them transition from one website theme to another and six months later, long story short, we bought their website off of them.

Pat Flynn: No shot. That’s cool. That’s actually really neat. And how’s that website going?

Jared Bauman: When we bought it, it was earning around 2,000 a month, and it’s just about to crack the 10,000 a month mark a couple of years later.

Pat Flynn: No shot. Okay. So how did, how did you, that’s actually, you know, that’s a really good, you know, purchase, obviously.

So let me ask you. Maybe you don’t have to tell me exactly a website making 2,000 a month, for example, what could a person expect to need to pay? It’s going to rain, it’s going to vary obviously, but ballpark, what would I have to throw down in order to then receive a website that would be generating already?

Jared Bauman: Yeah, good question. It’s really easy math. The typical ranges right now are between 30 to 40x of a monthly profit number. There’s a couple different factors there. It was higher last year because the economy was doing better. So more people were trying to buy websites. More people had access to cheap capital last year when interest rates were still low.

So this year multiples are a little bit lower because of the recession, because of capital being more expensive. There’s probably some trepidation in the market too about AI and just kind of wondering where all that’s going to end up. So multiples are probably in the lower side this year at time of recording.

It’s like, you know, mid 2023, but you know, they’ll fluctuate between the 30 X multiple based on several factors.

Pat Flynn: Huh? So now, I mean, saying that, that almost makes me believe like, wow, okay. Now might be a decent time to get in on something like this, right? If the multiples are lower, that’s for the buyer, at least.

Jared Bauman: Yeah. Bingo. That’s what I was going to actually say is if you’re confident about, you know, say the niche you’re entering and, you know, your ability to kind of take this project that you’re looking at the specific one and, and you have, you know, and I always, I always recommend like have multiple ways to win.

Don’t just have like, okay, we’re going to go in, we’re going to put AdSense on it, and that’s going to add this much money. And then we’re going to flip it. And it’s like, yeah, but what if you don’t get approved for AdSense? Or what if blah, blah, blah, blah, blah. You know, like have multiple ways you’re going to win.

Have a couple of ways that you could see this being a really good purchase. But if you feel confident about that, yeah, it’s a really good time to buy because multiples are a lot lower than they were at this time last year.

Pat Flynn: I like that. The equivalent would be like 2x annual revenue or two and a half times annual revenue, which is the, which is the terms that I’m more familiar with, which is annual, that’s like in the software space.

Jared Bauman: I don’t know why we refer to it monthly. I don’t know why that somehow that got started, but yeah, it’s like two and a half to three and a half x yearly.

Pat Flynn: Okay, that makes sense. And so now that the website that you had purchased at 2k a month is making 10k a month, essentially, you’d be able to make up the cost in five to six months easy, perhaps have already made up the cost.

That cost over time as you’ve ramped up and now it’s all profit at this point, which is, which is great. Minus, you know, what might be needed from the team to sort of upkeep the website and such.

Jared Bauman: Yeah, you’ve got your content costs or whatever you’re doing, but you know, yeah, it’s mostly profit at this point.

Pat Flynn: Yeah, that’s amazing. That’s actually really, really cool. First of all, congrats on that. Second of all, how did you go from 2k per month to 10k per month? Like what were some of the things that on this particular website that you did to make that happen?

Jared Bauman: Yeah, it’s a fun story because it was not a linear path of growth.

We’ll say that with all the experience I have in doing online marketing, SEO, growing websites, this one was rough. Oh, interesting. Okay. It was, it was pretty rough. So just a little backstory on this site. And these are the kinds of sites we love to buy. This was a site that was started way back. 20 years ago. And it was its heyday was in like 2012 or 2013.

It was pretty focused on a specific niche and really a sub niche of a niche, you know, it was still well regarded website in that sub niche, and it had a fantastic backlink profile. Over 20 years, a lot of different brands that were really relevant and really good were linking to this website. It was kind of a, it was just kind of a known expert.

Right. But the, you probably remember how things were back when you started blogging. Like that was back when like you’d publish a blog post and people would comment on it. Yeah. I know that’s a wild thought for a lot of people listening, but there were days when people would actually comment on blogs, the good old days of blogging.

Now that conversation is all moved to social media, right? Like we don’t comment on blogs anymore. That’s just weird. Like normally it’s just spam comments, if you even still have comments turned on, but that was back in the heyday of this website. So all this content that’s still on the website was like 300 word blog posts with 2, 500 words of comments and a lot of it most of it was about like current events in that industry. And so you got this website that’s earning some money.

It’s got good solid bones. It’s been built by, you know, niche experts, you know, people who are an expert in that niche. It’s got great backlinks, but the vast majority of the content is very much out of date. And you’re like, what do we even do with it? So, yeah, I mean, in the first year to just kind of fly through it, you can ask any detailed questions if you want to, but we ended up deleting over 75% of the content on the website, which was over 3000 of the articles. So we ended up just trashing. We did go through and update a bunch of the remaining articles. And then we just started publishing new content that was going to be much more search focused, you know, like not these moments in time, these news flashes, but content that was stuff that topics that people were actually looking for helpful topics, topics that were about comparing products that people might want to buy and really, you know, publishing as much of that as we possibly could.

Pat Flynn: That’s cool. Actually the deletion of all that content, I know that might sound scary to some people, but that’s actually a great piece of advice for SEO nowadays. We’ve had some people on the show before talk about how they’ve deleted like half their content and then their search results just go higher because the website’s much more focused and much more valuable to Google and those searching for those things in Google.

So that’s really neat. And then updating articles. Are you a subject matter expert in this particular space? And if not, how did you write decent content?

Jared Bauman: This would fall into that area that I have a curiosity for and like. Kind of know the niche, but definitely don’t know much about this specific niche.

So, you know, do as I say, not as I do, I suppose. I don’t know. It’s a good website. I promise. But we hired a couple of writers who were experts in the space. That was the route we went about thankfully. And I also kept in touch with the old owner. And that’s again, a benefit of buying off of someone that like you have a little bit of a relationship with. He and I are still friends still text back and forth. He’s still interested in how the website’s doing. And so there was a little bit of that, but yeah, we ended up just having to hire some experts for this. I’ve learned a lot about this niche over the last couple of years. So I, that’s kind of, that’s kind of been what’s fueled my comment on having a curiosity for it.

I do think that’s enough. If you’re willing to say I’m interested in this and I’m going to dive in and learn about it, this website kind of validated that for me that you can make a good go of it. I mean, I ended up going to a conference in this niche to meet other people in the niche to interact and to learn more about it, you know, and that’s the kind of curiosity I’m talking about.

So no, I’m not an expert, but it wasn’t like I was just like, Oh, cool. So this is a, you know, a website about traveling to Mars. I’ll never do that. Whatever. We’ll just kind of do what we can and see where it goes.

Pat Flynn: It reminds me of my food trucker website, right? I’ve never owned a food truck, but I was very curious about it.

And now I know enough about it to start one if I wanted to, but I ended up building this website over the years. It started to generate some money and I ended up selling it in 2020. And that I would consider very successful, even though I was not a per se, a subject matter expert. I was curious enough, if you will, which I do agree is very important on this website that you had purchased.

How was it making money before and how has that changed? Or did you just scale up what was working before?

Jared Bauman: No, it was really interesting. It was it was making money by offering ad placements to companies in that niche. So companies in that niche who serviced the types of readers that the website would have would buy like tile ads and banner ads, that was all the income.

So it wasn’t making any money from kind of more of the standard, you know, website type ways of like ad revenue or affiliate revenue and that sort of stuff. It still makes about the same amount of money off of the different companies that advertise, which is about 2,000 a month. Some companies have come and gone and vice versa.

Now the site makes money from a whole host of different methods. And a lot of that was because in the first year, I think we really shocked Google. I, I’m a big fan of deleting content. I’ve done it a lot. I’ve written articles in about it for search engine land. And, you know, I’m a big proponent. Like you said, like there’s been a lot of great case studies coming out lately.

IBM published that they deleted 90% of their content and saw huge growth. I think Canva came out with another case study just this week. So it’s a great strategy, but this site had been kind of ignored by Google for so long that I think we shook it. I mean, even after a year of publishing a ton of content and really work on the site, we were still only earning, I don’t know, 3, 000 a month.

So we had to get really creative. So a couple of things that we’re doing that now earn an income. I went to that conference. That was a big moment because not only did I meet a lot of companies in the space, but I got to see which companies were spending money, right? Like every company there that had a booth, I could go, Oh my goodness, they’re willing to spend money.

And so we started leveraging our email list and selling sponsored ads in the email list, sponsored email blasts, selling sponsored posts here and there on our blog. And so that became another driver of income that will make another 1,000 to 2,000 a month now, starting really with those relationships I built at that conference.

I also met a presenter who had a course that he had made. And he said, Jared, I’m not very good at marketing this course. It’s not really what I do. Would you buy it off me? And so we looked at it and it was a really good course. He gave us a really good deal on it. And so he bought a course, stuck it into our email funnel, stuck it on all of our blog posts and started selling that.

And so that course now makes us anywhere from 500 to a couple thousand dollars a month.

Pat Flynn: That’s cool. I like that.

Jared Bauman: We did, we did grow traffic to the point where now we are making money on Amazon affiliates. We are making money with ad revenue from AdThrive, now Raptive. So yeah, there’s a bunch of different ways that we were now making money off the site.

There’s really no one specific spot that makes us like the majority of the 10,000 a month.

Pat Flynn: That’s really cool. I love the idea of just like buying somebody else’s course and injecting it into your own brand and you know, obviously you did due diligence there as well and you met this person and you went through the course and so it was great.

So that’s that’s that’s wonderful. Was there any worry about the existing audience or email list as far as like the brand change. Like, was there, was there like an announcement like, Hey, everybody, so and so is leaving and I’m here now. And you know, here are the changes that are going to happen. Like, how does a transition like that happen when there’s an audience?

And maybe it’s less so in this particular case, but in your experience, especially if there is a connection between the creator and their fans, and you’re purchasing this from the creator, do you have any suggestions on how to manage those new relationships with that audience and email us perhaps.

Jared Bauman: Yeah, we spent a lot of time coordinating with the previous owner about the way that the phase out would happen and the way we would kind of market it and the way that we would be visible about it.

And, you know, I think we definitely lost some people in the transition in terms of their interest level or their validation of it. I mean, it was kind of getting handed off from, let’s be honest, a, an expert in the niche to a guy who runs a marketing company.

Pat Flynn: Yeah. The optics aren’t very good for anybody who’s following that space, right?

Jared Bauman: Nope. The optics aren’t awesome on that one. You know, you sugarcoat it. So, but I also, like I said, I tried part of me being interested is saying, okay, am I willing to commit to, to doing things in this industry. I, so I showed up at a conference and I went around and shook hands. Nobody was waiting in line to meet me, but I just went around and tried to introduce myself to as many people as possible.

I went on a couple of podcasts that are in that niche. I reached out and said, Hey, I want to come on the podcast and I want to talk about, yes, there’s been a change, but I want to share all the exciting things we have planned for this that I think actually will be positive, you know? And yes, there’s some downsides.

I totally get it. So and so isn’t here anymore. And now you’ve got me. I’m not, you know, anybody you guys look up to at all, but here’s some positive things we’re doing. Let’s get out in front of it. Let’s talk about it. Let’s not hide behind it. And so those are a couple of things that we did and wasn’t a perfect transition by any stretch, but the site has grown and we, you know, we still get a lot of positive feedback at the same time.

Pat Flynn: I like that. That feels authentic. It feels real. It feels like, okay, well, I’m here now. And I know that, you know, you don’t know me, but let’s get to know each other and let me earn your trust. Let me earn that authority that hopefully I can build over time with you. And I, I like that. And like you said, you’re always going to lose people in that situation, but I think that you can turn it around and have it be a positive for sure.

When it comes to the money exchange, you would purchase this for X number of dollars. Is that a lump sum up front or is that, is there like a, a way you can coordinate like a payment plan over time? Like what are the, what are the ways you can manage the finances around the purchase of a website? And also again, how do you protect yourself?

Do you have to get a third party escrow involved? Like how does, how does that technically work? Cause I think at this point people are going to be very curious. And I, again, I love the idea of, Hey, like I could fast forward my way to a website that has traffic already. I don’t have to like wait a year for that to happen.

If it happens, I can actually have that now for for, for money that, okay, it’s money that maybe I wouldn’t have to spend, but I also now have this time that I’ve been able to buy as well to get to this point. So anyway, to the question, financing and money exchange, like what’s typical, what can we do and how do we protect ourselves?

Jared Bauman: Great question. Yeah. Let’s man, let’s roll up our sleeves here. Okay. So the vast majority of purchases that are going to be sub 500,000, I would say. Typically if you go to a marketplace and if you just talk with a new person one on one, they’re probably gonna want all, if not the vast majority of that right up front, okay.

Deals above that can start to have earnouts, but they’re typically pretty small, like maybe 20% of the total purchase price will be an earn out.

Pat Flynn: What does, what does earn out mean for those listening?

Jared Bauman: Yeah, sure. So maybe you’ll put 80% down. Let’s say you’re buying a website for a million dollars. You’ll put 800,000 down and then 10% will be due in nine months and another 10% will be due in 18 months. Got it. Okay. So really in, in this capacity, very much unlike real estate where you put 15, 20, 25% down and then you get an awesome fixed rate mortgage, you’re putting the majority of your money down up front, but at the same time, everything’s negotiable.

And so last year when, you know, deals were very high multiples, it was certainly a seller’s market, much harder to negotiate payment terms. This year, significantly easier. Now with our website that we’re talking about here, I kind of glossed over the details, but we didn’t actually want to buy this website initially.

We’d gotten to know the owner and again, he kind of heard about, you know, this, our, our model at our agency and how we run websites inside. And he said, Hey, can you buy my website? And I’m like, Oh, we’re not really interested in any projects right now. Like he’s like, but I thought you said you liked this website.

I’m like, I really do like this website. I really liked this website a lot. Here’s all the things I like about it. And so he just kept pressing and saying like, no, let’s try to figure something out. I really don’t want to be running this website anymore. I have other things I want to be doing. And so we were able to negotiate on payment terms and I only had to put about 40% down and then make payments in the exact same amount that the site was earning every month until the website was paid off. And so I put, you know, I think it was under 20,000 down on the site and then paid him 2,000 a month until we paid up the full amount of what we agreed upon. And so while I still was spending money to update the site and publish new content, I was basically taking the money the site was earning and paying it to him.

And so the risk for me, but there’s other risks, but the big risk was just the, you know, whatever it was, the 40% down on the website. And then I was letting the website pay for the rest of the purchase, which allowed me to keep more of my capital and make it a less risky investment.

Pat Flynn: That’s really cool. I actually like that even from the seller’s perspective.

It’s like, okay, well, my income is going to remain the same for a number of months until it’s paid off. And during that time I can figure the next thing out and I don’t have to worry about, you know, maybe having a larger lump sum, but then, you know, wasting it or, you know, anyway, I just love that model. Is that kind of uncommon in the space?

Like, cause I think that could be, that’s sort of a nice way for a person to do this without having to spend as much money up front if they’re now curious about this.

Jared Bauman: So this type of model is how I’ve sold every one of my businesses so far. And I think that it’s probably uncommon, but only because people don’t talk about it.

They don’t pitch it. You know, a deal is up to whatever is best between those two parties. And, you know, like figure out what’s best for you for this person it was advantageous for them because It made the deal possible, but also to what he said was, Hey, this is actually really good for me from a tax standpoint.

I didn’t get into all the reasons why, but he’s able to spread out his earnings. It kind of made sense and stuff. So I think it’s really up to the two people sitting down and just being honest and open as much as possible about what kind of deal makes the most amount of sense. You know, I’ve, I’ve known people who would never want to sell their website on terms because you know, they don’t know if that person’s going to be around to pay them and stuff.

So it just really comes down to what the two of you can work out, but this deal wouldn’t have happened if we hadn’t gotten some sort of terms because I just wasn’t willing to spend the multiple times a monthly in that moment. And for him, he’s like, well, I got a guy who I know will take good care of this website.

He understands it because he’s been working the last six months. I’m not in this space. I don’t know how to find more buyers. So let’s work together on it. We came to a good agreement.

Pat Flynn: That’s awesome. Did you have to get attorneys involved to go through the fine print and kind of just work with their people to kind of come up with something in a contract?

And is that kind of how this goes down? Or is it, formally, how does this actually happen?

Jared Bauman: Let’s see. I don’t think we had to get any attorneys involved. I think I bought a template for buying a digital asset and then we just tweaked it a bit. And made sure we were both comfortable with it and made sure that the payment terms were like super spelled out.

That part was really important. I might have had an attorney look at that and review it. I’m not even sure it definitely wasn’t a big deal. We did sign paperwork and I do encourage everyone to sign paperwork, but I don’t think you need to like get 1,000 worth of attorneys involved for stuff like this, unless you’re buying like a really big deal, you know, at that point you want to make sure that your T’s are crossed and I’s are dotted and all that.

Pat Flynn: For sure. Jared, this has been super interesting and super inspiring. You know, I’m, I’m curious to go to different marketplaces now and see what’s available there. What are your recommended marketplaces is for those starting out to just, you know, even just search around and explore.

Jared Bauman: Yeah. So I have personally bought and sold with Motion Invest and with Empire Flippers.

I, I know the founder of FE International and while I haven’t done a deal there, I have a lot of friends who have and they’ve also had good experiences. Motion Invest is, is the spot to go for like really entry level websites, probably selling for maybe 10,000-20,000 a month. They don’t do as good of a job of due diligence though.

So just going to be fair, full warning. Like I don’t even know if they do any due diligence, to be honest. Empire Flippers going to be deals like maybe 50, maybe minimum of 50,000, but Empire does a lot more due diligence. And I know that for a fact, because I’ve sold a website through Empire Flippers and stuff.

So and then FB International. Probably better for some of those bigger deals, you know, 200,000-300,000 and above. And from talking to the owner and the people I know who’ve sold there, you know, they also do a really high level of due diligence.

Pat Flynn: Do, sorry, I’m just on Empire Flippers. Now looking through, this is super interesting.

It’s telling me what the price is, a monthly profit, monthly revenue.

Jared Bauman: And they’d sell all sorts of businesses like SaaS businesses and e comm businesses, FBA businesses. You know? So while I, I. Like I spend my time in the content website space. Like that’s what my agency does mostly is content and local service businesses and large scale businesses like SaaS businesses, there’s a ton of e com and FBA stuff on like Empire.

Pat Flynn: Yeah. I’m looking at that. That it tells me the main monetization methods that are being used. From display advertising to Amazon FBA service for this one, display advertising, e commerce, subscription box in the jewelry, religion, and spirituality space. I could buy, it’s a 13 million dollar business. This is crazy.

This is, this is wild. As we finish up here, Jared, again, thank you so much for this. It’s been super fun. What might be one or two pieces of advice you have for people who are just like getting their toes dipped into the water here so that, you know, how do we make sure we don’t big mistakes while doing this?

What, what advice from your perspective, now that you’re sort of a veteran in this, would you have for us beginners?

Jared Bauman: Yeah, many years in now I can look at a website and kind of get a look and feel of it really quickly and easily, but that’s just because I spend all day working with clients and websites.

In the very beginning, the first website I bought I bought actually from Motion Invest. I think I spent 7, 500 on it back. I think 2019 or 20, probably 2020. I don’t know. I should’ve looked it up before I came, but I went into that with a ultra, ultra serious list of requirements for, for what I wanted to buy.

I came up with a price range that I wanted to pay. I came up with a multiple range that I was comfortable with. I came up with a specific type of site I wanted. I wanted a site that was getting enough traffic that I could qualify for an ad network, but that it wasn’t on an ad network yet, because I knew that would be an instant win in terms of being able to add more monthly income.

I wanted a site that was really, really expertly written, but wasn’t really written very well for search optimized content. So I wanted a site that had an expert behind it, but it was more like a passion project that he wrote about, or she wrote about, and then I could go in and update the content to be more optimized because I knew SEO.

So I had this really, really specific set of criteria that I wanted. I had five things and I would really recommend for your first website purchase, get ultra serious and about the list that is, you know, and be very, very specific and settle on it. And then every time you see a site that’s interesting to you, you don’t have to bring your emotion into whether you buy or not, just evaluate it for your criteria.

If it doesn’t meet the criteria, move on emotionless and don’t worry about it does meet your criteria, then you have the permission slip to really dive into it and see if it’s a good purchase.

Pat Flynn: That’s awesome. That’s super huge advice. Jared, thank you so much. Where can people go to follow you? I know you have an agency.

You can shout that out as well. Where, where should people go to follow you and kind of get connected if, if they’d like to?

Jared Bauman: Yeah, sure. I’m, I’m on Twitter a lot. So that’s Jared, just my name, @JaredBauman. My agency is 201creative.com. I blog over at, oh, I almost forgot. I blog over at weekendgrowth.com. I do have a free tool.

If people want to get access to our site analyzer tool, which that’s the tool we use at our agency to figure out which content needs to get deleted, which content should be optimized, which content should be kept. I’ve meant to mention that earlier, but I forgot, but that’s it. A WeekendGrowth.com/spi.

Pat Flynn: WeekendGrowth.com/spi. Awesome. Jared, thank you so much. This was super fun and looking forward to connecting again soon.

Jared Bauman: Yeah. Thanks Pat. I hope it helped everyone. Cheers, man.

Pat Flynn: All right. I hope you enjoyed that episode with Jared Bauman. Again, you can find him at 201 Creative or at @JaredBauman, B A U M A N on Twitter.

We’ll have all the links and show notes for you at smartpassiveincome.com/session707. Once again, smartpassiveincome.com/session707. Investing in a website can be an amazing way to fast forward your success. Obviously, you don’t want to waste your money. So hopefully this interview saved you some time and some money and some headache as well, if this is something you’re going to get into.

And who knows, it might be something I might get into a little bit more seriously into the future. But for right now, speaking of the future, we’ve got a lot more great episodes coming your way. Make sure you hit subscribe so you don’t miss out on them and I look forward to serving you then.

We have another episode coming this Friday for you with just me and I look forward to chatting with you then. Peace out. Cheers. And we’ll talk soon. Bye everybody.

Thank you so much for listening to the Smart Passive Income podcast at SmartPassiveIncome.com. I’m your host, Pat Flynn. Sound editing by Duncan Brown. Our senior producer is David Grabowski, and our executive producer is Matt Gartland. The Smart Passive Income Podcast is a production of SPI Media, and a proud member of the Entrepreneur Podcast Network. Catch you next week!