Some people are looking to buy a business to work in, themselves. Buying a web property generally provides a turn-key business that is, hopefully, already producing revenues and is a good investment. This saves the buyer a lot of time and effort creating and marketing the site to attract traffic. Good reliable traffic generally means good reliable revenue.
Other people are accumulating an investment portfolio of websites that produce income. Those who only own a couple websites usually manage them personally. Owners of larger portfolios hire people to do the management. There are individuals and companies all over the world offering these services and most of them do a great job of it no matter where they are located. The Internet connects us all in a standardized way.
So why do I think of websites as similar to bonds?
Websites pay their owners somewhat passive income if the site is set up to do that. Not all websites are managed to generate income — their purpose is to be a brochure site for some business. They are not the investment-quality sites I am talking about. Those web properties, that are operated as small businesses with the goal of producing their own revenue, do result in potentially reliable income and can be considered investment-quality.
Some result in more income than others. That’s where quality comes in.
When you buy a Treasury bond, you are pretty much assured you will receive your timely interest and principal payments. When you buy a corporate or municipal bond, your timely interest and principal payments are reliant on the performance of the corporation or municipality that issued the bond.
When you buy a website, your stream of passive income is dependent on the marketing skills of the operator of that web property. Like I said earlier, there are people and companies all over the world that specialize in operating websites for the purpose of generating revenues, and they don’t cost all that much to hire.
The important difference, as I see it, is that if you own a website you can change the quality of management, so you have control over the vulnerability of your income and asset value.
With a bond, you just have to hope the managers of the issuer are doing a good job and will pay you your interest and principal in a timely fashion.
Oh, and I forgot the other main difference: Return on investment.
Right now, bonds are yielding pretty much zip in interest.
I am seeing websites being sold that will return as much as 50% annually on the investment amount. Most of them return about 30%, but again, the return is dependent on how they are managed, which is not difficult when all the pieces are already created and in place.
What this means is that you can buy a website, neglect it or mess it up, and your return will go down. It also means that you can buy a website, put in some improvements yourself, or hire someone to do that and manage it for you, and your returns will likely rise. Not only can the income fluctuate depending on how seriously you take the investment, but the value of the web property will fluctuate, too.
Many people invest in modest web properties, add SEO and social marketing, spiff up the site itself, and then sell it for a big profit — having received increasing income while working on the improvements.
So, you are probably wondering why web properties are such a great investment deal.
A huge part of the reason is that investing in them hasn’t hit the mainstream, yet.
Don’t expect the fabulous returns to remain so fabulous in the future! I am already seeing them start to slightly trend down in just a few months as their purchase prices rise. As bond yields remain low, and the stock market is getting scary, more and more people are looking for alternative investments — like web properties.
And many are finding good investments in web properties. I help people to buy and sell web-based businesses. I help my clients identify web businesses that are appropriate to their skill sets and experience. Then, I assist in the due diligence and acquisition. I also work with clients who own websites that they want to sell.