Good morning! As the title says, I am not the proud owner of a third PF blog… I had this idea a few months back to start looking for another blog, almost bought one back in February and now it is official, servers have migrated, passwords have been changed, all mine.
Got a new super secret website!
Why buy a third blog?
Well, I have been really happy with the income RFI has been producing, and always considered the money “fun money”. Or money I could spend on a risky investment without having to worry about the consequences. After all, I started blogging because it was fun to write, and I still am having lots of fun with RFI.
When the online income started piling up on my Paypal account, I realized I couldn’t withdraw the money and send it to my US$ account in Guatemala, because the account is registered in France. Yes, I checked the rules about Guatemala, and if you are registered here you can’t withdraw money either, you have to get a USA bank account. I could pay Paypal a 4% commission to transfer my balance in Euros, then another 2-3% for my French bank to send it back to Guatemala, oh, and a further 2% to convert the balance back into US$. Thankfully, I don’t need the money that bad as to take a 10% hit.
So I let the money there, waiting to buy someone’s website with it.
How much is a blog worth?
Well, I have no idea. I have read a bit about it online and the consensus seems to be 12 to 24 months of income. Of course, there is good income and not so good income. If the income from the blog you are trying to buy comes only from Adsense or affiliate links, that is great, because if you maintain the same level of traffic, you should be able to replicate the income. If most of it comes from private advertising, you never know if you will get ad deals the next month, or when the next G slap will happen.
So for blogs that rely mainly on private ads, you could offer to pay 6 months of private ads income, or 24+ months of their Adsense income.
For example
Blog A makes $100 with Adsense and $1,000 with private ads. At 24 months of Adsense it is worth $2,400, at 6 months of total revenue, it is worth $6,600.
Blog B makes $500 with Adsense and $600 with affiliate income. At 12 to 24 months of total income, it is worth $13,200 to $26,400. You are almost guaranteed to make your money back in two years if you keep doing what the previous owner was doing (which can be a lot or nothing depending on the website).
They make the same income but A might be as much as four times cheaper than B.
Then come other considerations that will be of importance. The blog’s PR, number of RSS followers, newsletter subscribers, Twitter and FB fans, Mozrank, Domain Authority, domain age, etc. If you don’t want to invest too much time on the blog, you should choose a blog with a lot of organic traffic. Check the number of posts, if they are SEO optimized, and put a couple of new posts every month.
If you choose to stay active, and the blog you have your eyes on has an engaged readership, it may be a problem to keep the fans and traffic.
Return on investment
The returns are pretty good when buying a blog, even at 24 months worth of income. Paying $24,000 for an investment that makes $1,000 per month is awesome, and a 50% p.a. return. That is if you bought blog B.
If you bought blog A, you took a bigger risk. You paid $6,600 for an almost guaranteed $100/month return, and a maybe $1,000 on top. If everything goes well, you keep making $1,100/month and get a 200% return. Or more if you expand the blogs and its revenue streams. Congrats. If private advertising stops and you only make $100 a month, you would still get a 18% yearly return, BUT
– it would take over 5 years to get your money back.
– your blog would not be worth $6,600 anymore, at most, it would be worth 24 months of income, or $2,400.
I have seen blogs selling for as much as 36 and 42 months of income, in the case of well established blogs with a solid history of Adsense and affiliate income.
Why not start another blog instead?
Because it takes a lot of time to get the blog to the level it is at when you start turning a decent income. It took me six months to get a solid income on RFI, and now, without a PageRank on MMYW, it is hard to attract advertising. So I am buying six months worth of effort, and a PR to seduce the reps who still consider it the main metric to judge a site. If I keep this blog at the level it is, in six months, I will have made my money back and then some, so I will be ahead compared to starting a blog from scratch.
In the case of blog A, it would take six months to break even, at a level of effort inferior to starting a blog from the ground up.
In the case of blog B, it would take 12-24 months to break even, but since the blog has organic, income generating traffic, you don’t really have much work to do and the blog shouldn’t lose value over time. It is like having $13,200 to $26,400 in the bank, generating $1,100/month in interest (better than any rental property in that price range, and without the tenant drama), and you can get out anytime by selling for roughly the same price.
Which did I buy, A or B?
I am the risk taking type, so I bought blog A. It is monetized mostly with private advertising so far. It needs quite a bit of TLC as the last owner has been busy for some time with other project and has not put as much time as before to keep it dynamic.
I am hoping to diversify its sources of income but will also spend quite a lot of money in staff, so I can keep mostly concentrating on my two babies, RFI and MMYW.
What is the plan?
Well, the plan is to pump some fresh content, have my VA optimize the existing content, and try to keep it growing. I will be monitoring my progress in the monthly income and stats reports here on MMYW, although I won’t disclose the name of the website just now, nor the selling price. I will announce which % of the purchase price I have made in income each month, until I break even. Then, I will show the real figures, and the site won’t be anonymous anymore.
Once this blog breaks even, 10% of its income will go to sponsor young girls’ education in my village.
This post was featured on the Carnival of Personal Finance, Budget and the Beach, Carnival of Personal Planning, Aspiring Blogger, How to Blog Carnival, Lifestyle Carnival, 101 Centavos, thank you!
Congrats on the acquisition 🙂 I would look into buying a blog instead of starting a new one too, if I ever want to spend more time blogging. The different methods of valuations are pretty interesting. Looking forward to see your income updates with the new site 😀
Liquid recently posted…Canadian Housing More Affordable Than Ever
I don’t know how accurate those valuations are because it is such a new business with little information, but I would look at making back the money asap before the rules change.
Brilliant! I can’t wait to see the figures. This will be fascinating!
I like that you went for option A, as I think it will make for more interesting updates. The ROI figures look great for this type of purchase, so congrats on your purchase.
Next step, web domination!! 🙂
moneystepper recently posted…Housing bubble in the UK – part III: regional variation
haha we are not there yet! But it looks like the beginning of a nice project.
Congrats! I recently bought my first blog as well. There wasn’t much on it but it did have a PR and that price was good.
Michelle recently posted…Ways To Make Money During The Holidays
congrats to you too!
Fascinating! Never considere buying a blobut am now intrigued.
eemusings recently posted…Link love (Powered by bush walks and curry laksa)
it is a fun way to diversify your portfolio!
Well done, Pauline; and thanks for the information on buying blogs. Who know which part of the divide I’ll find myself on – useful in both cases :).
maria@moneyprinciple recently posted…Principled Money Posts #57: do we need investing lessons from our 12 years old son?
Congratulations Pauline! Looks like you’ve done your homework!
Moneycone recently posted…How To Invest When You Have Very Little To Invest
I hope so!
Nice work Pauline! I’ll be interested to see how this turns out for you. Thanks for shedding some light into how the blog-buying process works.
Brian @ Luke1428 recently posted…What Good Is Freedom When You’re Told What To Do With It?
It is pretty strange at first because you can’t value a blog like another investment but it is a fun process!
Congrats! While I do plan on starting a blog from scratch, it really is too bad that pagerank hasn’t been updated and may never be updated. I think it will make it much harder to get that initial cash flow. I really don’t blame you for buying an already established website and I might consider going down this route with my third site.
DC @ Young Adult Money recently posted…Should You Switch Jobs Every Two Years?
You are buying a readership mostly, which is pretty hard to create. Then it all depends on how hard you think it is to monetize a site about XYZ.
Great job, Pauline! That’s awesome. Let me know how I can help you promote it!
Holly@ClubThrifty recently posted…How to Earn $800 for Doing Nothing
will do, thank you!
Nice work Pauline! I’ve been thinking of this more myself a lot lately and have been leaning towards the blog buying route. I’d love to start a second site from scratch right now but having one that already has some things going for it is really tempting. Let me know if there is anyway I can help promote it.
John S @ Frugal Rules recently posted…Is Black Friday Really Dead?
thanks John, will do.
Very cool! I am always on board with making investments. It’s really difficult to build a blog from scratch. Hopefully you were able to get a good deal on it and the investment pays off for you.
Daisy @ Prairie Eco Thrifter recently posted…Why Physical Fitness is Important
I hope so! thanks for the good wishes.
I think you’re right on the mark, Pauline. It makes SO much more sense to buy an existing blog than to start one from scratch. Great job!
Laurie @thefrugalfarmer recently posted…Moving Forward and Being Thankful
Thank you Laurie!
Way to go Pauline and thanks for a very informative post on the issues associated with buying an already established blog!!
Personally though, I am one of those who would prefer to just start from scratch and work up from there.
However, if the price was right, then maybe I could be “forced” to chane my mind 🙂
Good luck with your new endeavor and keep us posted.
Take care and all the best.
Lyle
lyle @ The Joy of Simple recently posted…On Meeting Dale
Thank you Lyle, it is mostly an investment, i don’t think I will go too personal over there. Like you would buy a stock or a bond and hope it appreciates. My personal outlets will remain RFI and MMYW.
Fantastic! I am really excited to see how this affects your upcoming earnings reports and how long it takes for you to get a return on that investment. You’ve killed it with various means of income diversification over the year, both online and offline, so it will be great to continue to see how things materialize for you.
writing2reality recently posted…New Here? Let me show you around!
Thank you! It is an exciting new adventure, I hope it turns out ok.
I think you’re smart and savvy and you probably know better than any of us! It totally makes sense to buy and existing blog. For me though part of the joy of blogging is creating it and building it from the ground up. Call me a glutton for punishment. ha ha! And it will be interesting to see if Google ever does another PR update. So weird.
Budget and the Beach recently posted…1/2 Marathon Training Diaries-Week 4
I differentiate RFI and MMYW that I built from scratch from the new super secret website. The latter is mostly an investment, while the other two are my babies that I can brag about taking off from the ground. So I see your point there.
Congrats! This definitely sounds like an investment in your sweet spot since you’ve shown yourself to be quite skilled when it comes to monetizing websites. Good luck!
Mrs PoP @ Planting Our Pennies recently posted…We’re Vested… Now What?
thank you Mrs PoP! I hope it pays off.
Very cool, congratulations!
FI Pilgrim recently posted…Avoid Overspending When Throwing A Pity Party
thanks!
Congrats on the new blog! I would totally buy one too if I decide I want another blog. I(t just saves so much time since starting a blog from scratch can take forever to get it to a good income producing level.
Fig @ Figuring Money Out recently posted…A Step By Step Guide To Starting Your Own Business
Thank you, it does save time but you have to make sure the old blog still has some readership.
Wow, that’s awesome. I’m game to purchase a blog of type B, if anyone is interested in selling!
Anne @ Unique Gifter recently posted…10 Expensive Wedding Gifts
Will let you know when I turn A into a B haha
Congratulations, Pauline! Sounds like a great opportunity for you and I know you’ll make it work! Looking forward to hearing more about as you dig into it.
Shannon @ The Heavy Purse recently posted…A Personal Letter to the Readers of The Heavy Purse
Thank you Shannon!
Congratulations, Pauline! I like how you shared your thought process within this post– gives me a lot to think about when I come around to making a decision like that. Thanks for sharing!
Terry @EasyFinancialTips recently posted…5 New Year’s Money Resolutions Everyone Should Make
Thank you Terry!
Congrats on the new acquisition, the RFI empire is slowly exapnding…you might be a web property mogul soon 🙂
Given that good ol’ Google is dragging her feet in updating PR coupled with the set mindset of most advertising guys, I think its only prudent to go this route. If you do your research well, as certainly you have done, there are nice opportunities out there.
Looking forward to the big revelation!
Simon @ Modest Money recently posted…Is Camping For Black Friday A Good Investment
Congrats! Seems like a relatively easy way to get some revenue quickly (versus building a new blog from scratch). And hopefully you can grow the revenue from the new acquisition as well. I’m curious what the new blog is.
Good luck!
Justin @ RootofGood recently posted…Investment Management Using Asset Allocation Targets
Congrats Pauline, I can’t wait to hear more about it!
Catherine recently posted…10 More Things You Didn’t Know About Me
Congrats! I am a newbie blogger so it is cool to hear about this and dream about what I could be doing some day 🙂
Dee @ Color Me Frugal recently posted…Your house is about to explode: What do you grab?
Congratulations Pauline,
You’re becoming the blogging mogul. Look forward to hearing more details.
charles@gettingarichlife recently posted…Kailua Town Tourists And Sharing The Aloha Links #4
Congrats! I’ve always wondered how the valuation of blogs works. While it sounds like more of an art than a science, your basic assumptions make perfect sense.
Jon @ MoneySmartGuides recently posted…How Instant Gratification Has Killed The Stock Market
Yes, it is tough to know how much a blog is really worth, but you can always assume that you’ll make a portion of what it has been doing in the past.
I think you are very generous for sharing in so much detail, Pauline. Though I know a couple of people who’ve bought blogs I haven’t seen this level of detail shared before. I’d definitely rather buy an existing blog than start a new one from scratch. Having done that once I wouldn’t be keen to go back to the start. I still remember that feeling of writing into a black hole for months without readers, traffic or income! A necessary step, but not one I’ll repeat. In my view, buying an existing blog and tweaking/improving is a much better use of time. Best of luck with it and looking forward to the big reveal once you’re breaking even.
Skint in the City recently posted…Ho ho how to save a fortune at Amazon (and three other ways to bag online bargains this Christmas)
Thank you! After taking two blogs off the ground, I went the lazy way… Finding info about prices and such is indeed pretty complicated. There is a marketplace called Flippa where people sell websites and you can check old auctions to get an estimate.
This isn’t something I have any interest in yet, though I can definitely see why it could be a worthwhile investment. Right now I’m just more interested in improving my own blogging and working on building my current following. It’s more appealing to me to have one big project than several little ones, though I realize there’s risk in that as well. Good luck with the new site!
Matt Becker recently posted…What is Rebalancing and Why is it Important?
Thanks Matt, it does spread the risk, and you can also have different topics on each site, but overall it is a lot of work.
Congrats Pauline, look forward to learning the specifics of the purchase, this has interested me in the past, thanks!
Jim recently posted…Not All Billionaires Are Money Grubbing Tyrants
Great news Pauline! Your sites have always been amazing and I think the new site will benefit from your ownership. I’m hoping you bought the site I’m thinking you bought but I won’t take any guesses to spoil the secret.
Levi Blackman recently posted…Renters Insurance and Why You Should Have It
haha, that may be that one!
I still haven’t figured out how to monetize the blog I have! It’s a big frustrating seeing as I’m finally at a point where I have respectable numbers- though I was a little too late for an updated PR.
Stefanie @ The Broke and Beautiful Life recently posted…How To Vacation When “Broke”.
Thanks for the explanation. Where do you go to find blogs for sale? I’ve heard of flippa and went there just out of curiosity. I would not know how to value a blog so thanks for explaining the valuation. It has crossed my mind to buy a blog but I don’t yet know how to monetize my own blog and will need to continue to learn before I jump in on that.
Andrew@LivingRichCheaply recently posted…Black Friday: The Epitome of Consumer Excess
I have had quite a few burned out bloggers offer me directly to buy their blogs, which is pretty cool because you know the quality of a blog you’ve been reading and following for a while. You can also find them yourself, when you notice someone is not posting as much as before, or talks about “not having time to blog” that is a pretty good time to make an offer.
Congratulations. I would be interested in hearing more about how to find a blog to purchase.
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I find the transaction costs of getting money out of Paypal more interesting than purchase price FCF multiples. 10% to get money from USD in the US to USD in Guatemala?
Rather than investing it all back into another blog, do you have other options for investing it that don’t require the multi-step conversion? Presumably with a Paypal account in USD, could you put it in P2P loans with Lending Club / Prosper, or make a real shoot-the-moon investment via Kickstarter?
I’m genuinely curious, as the transnational aspects of your business are something I’ve not had to face, and likely most others here haven’t either. Perhaps a future blog post on multi-national investment opportunities for those in complicated situations like yours.
Jack @ Enwealthen recently posted…How to Survive Disaster with a Financial Emergency Preparedness Kit
Hey Jack, Happy New Year! You can’t have a Guatemalan Paypal account linked to a local bank account, and I can’t have a US account as I have no SSN or address there. My Paypal is French based, so I can only link it to a Euro account or a US based USD account, they won’t accept my USD Guatemalan account. So if someone pays me in USD on Paypal, I can buy stuff on Ebay or invest the money somewhere. One option is fund my forex account but they do charge a small fee, I think around 3%, and I already have quite a bit of cash there. I am too lazy to do proper homework on P2P so haven’t invested yet.
I also have managed for a few ad deals to be paid to me in Euros or GBP as I have a UK Paypal too, and then I pay the blogger I brokered for in USD so it decreases my account balance at no cost, I pay my VA from there, etc. multi currency makes the process more complicated but you can also make money if/when the currency is stronger, and in the end make up for the fees.
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dress-up online games recently posted…dress-up online games
Very interesting turn of events!
One question and apologies if it has been answered in other articles… but how do you get a google page rank. Is it just something that happens with time? Thanks!
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