Website Investing Case Study 1 The Acquisition

Website Investing Case Study 1 (The Acquisition)

Today, I am going to share a case study on website investing. If you must know, one of my many side hustle is website. Not many people are aware that websites are a very valuable asset. It is a digital property that gives you monthly income if done right. I do not want to bore you with how good website is etc in this post. This post will be the first of my Website Investing Case Study series or short for WICS Series.

For this first post of the case study, I will be sharing how I found the website and the acquisition process. It will be a start of many updates for this website. So let’s begin!

In March 2020, I came across a website listing on one of the many Buy/Sell Websites Facebook Group. Below is the screenshot of the listing:

Website Listing on Facebook Group

Website Listing for WICS 1
The figures above are in USD

The listing is for a 20 months old Amazon Affiliate site that is earning $628/month on average. It is getting about 3000 visitors per month. As you can see from the listing above, the earning is on an upward trend so that is really nice. The site is also ranking for valuable buying intend keywords. The asking price for it is $18,725 which is 30x the average 3 months earnings. (That is the going rate for websites nowadays)

Process of Acquiring The Website

The first step is of course to contact the seller and ask for more details (By that, what it usually means is “What is the URL?”). The seller required a proof of funds before releasing the URL and adding you to Google Analytics. Although this is troublesome but it is good for the serious buyer as this means the URL are not exposed to everyone and anyone (Even competitors who are fishing for keywords).

Ahref Screenshot for WICS 1
Ahref Screenshot of Website

Once that is done, my real due diligence begins. Here are things that I usually check for:

  • Verify the traffic is as claimed and check for any funny pattern/trend in the traffic
  • Check for the quality of the content and if it is unique
  • Put it through Ahrefs to check the backlinks, keywords, anchors and many more
  • Check the Amazon ID if it matched the earning screenshots
  • Do a quick research in the niche for expanding opportunities
  • Look for low hanging opportunities such as optimized conversion and other affiliate program

After My Due Diligence

After doing my due diligence, the site ticks all the box and I like it. The only stumbling block is the price. I am not going to pay $18,725 for the site as I always believe in buying an undervalue property whether real estate or digital assets. I am a high-risk investor but that is a lot of money for 1 website (Need to change this mindset to grow but that is another post).

Over the course of our conversation (when doing my due diligence), I also asked his reason for selling it. He shared that he is looking to raise funds to support the growth of his other websites. And he is seriously looking to sell it. After chatting with the seller for a few days, I informed the seller that I like his site and am interested. But I will have to pass on it because my valuation of the site is much less than his. The reason for my valuation is the domain is brandable BUT too niche specific that it is hard to expand. We agree to disagree and move on.

Seller Contacted Me Again

A few days gone by and suddenly the seller contacted me asking if I am still interested in the website. I said I am but not at the price that he is asking. He told me that he has not gotten any offer from anyone for his site for the past few days. He asked how much I would be comfortable paying for it. At that point, I can sense that he is eager to sell it and decided to make a low offer of $8782 (about 15x the 3 months average). I figured if I can really get at this price, I can get back my total investment within a year plus at its current earnings.

He did not totally dismissed the offer of $8782 which is a good sign for me. So after negotiating, we both agreed on a sale price of $11,878 (19x of 3MA). I was excited.

Process of Finalizing The Deal

We agreed to deal via Escrow (Seller pay the fee). I deposited $11,878 into escrow via DBS Bank. You can transfer overseas using their DBS Remit & Overseas Transfer service. Although I have bought quite a number of websites before, it is still nerve-wrecking. This is also my biggest website purchase thus far.

Escrow Proof for Purchase
Screenshot of Escrow Payment

Once the fund is in Escrow, we started with the transfer of the website. Domain transfer via Namecheap and I bought a hosting account with WPX Hosting for $350/year. As I’ve done this quite a number of time, the transfer went smoothly. In a couple of hours, we managed to complete the transfer. When that is done, I verify the traffic again and earnings for 2 days before releasing the fund to the seller.

With that, I’ve just invested $12,263 ($11,878 Website + $350 WPX Hosting + $35 Fees) for a website.

In my next post for this case study, I will share what I did and how has the website fair (Hint: I am super happy with the first 3 months). [Edited: Check my 3 months update.]

Hope you find this post interesting enough to leave me a comment below. See you and happy MELEPAK guys!

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