4 Reasons Why I Hate Website Flipping
Hate might be a bit strong. I don’t really hate it - in fact I think it can be a good thing - but I’m not too keen on it. In this post I will explain the top 4 reasons for that. For me these reasons outweigh the 5 benefits I described last time. They’re not problems for everyone, though.
The biggest problem I have with website flipping is that it creates a form of active income. I find active income limiting, and prefer creating passive income streams . It’s active income because you do the work (build the website, bring traffic), and get paid for it once. Whereas if you hold on to the website you keep getting paid repeatedly - after all, it’s a low maintenance website, right?
Another problem I find is that there is a lot of space for creating spammy websites. Because it is easy to sell template-based websites with no traffic and no revenue, and because there are enough inexperienced buyers, there is enough incentive to build numerous lower-quality websites (that would only really survive the short-term) and go for the quick flip. This increases noise on the web, and I don’t particularly like that.
Somewhat similar to the last one is the third problem - the websites that you can sell are limited in scope. Not because of any marketplace rules, but because of the people involved. The website you want to sell needs to be low maintenance, high income potential. This immediately rules out any website selling a physical product. It can limit your thinking and cause you to focus too much on what flippers would buy, and too little on what visitors would love to find.
The last problem for me is about pricing. As I’ve mentioned several times already, a website typically sells for 5-8 times its monthly revenue. I consider that to be a "low" valuation - for me a website is worth more as a business, than its 6 months of income. Think of it this way, would you expect Amazon to sell for 5-8 times their monthly revenue? I prefer to work on projects that have huge growth potential, and the 5-8 month horizon doesn’t cover for that.
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