$17,000 a month net in a domain

If there is nothing to worry about then ask them why the heck are you selling then?

There is no way I would pay that in a million years unless sex.com or fund.com was thrown in

Well if each one is making $5-6 dollars, you could easily make that with adsense on blogs with medium traffic, If you're really considering it, get like 3 domains you could check out, if its all ads, I'd say just skip it and go for something else, and like @entrepreneurjay said, unless a good domain was thrown it, its not worth it. Save you money and try to purchase a one word dictionary name, you have a better chance of making money with that as long as its a good one word dictionary name.

G

Don't buy it if they aren't revealing the domains. Plain and simple. If your gonna buy something, learn how to use flippa.

I would proceed with caution and make them verify that income and traffic for one. That's a lot of moola in renewal fees for domains that could have been struck by a Google algo and are on the decline. I'm skeptical. I doubt if I would do this.

Even if it was true, it would take almost 3 years of 17k a month earnings to recoup 550k. That seems a bit absurd to me.

Ah, try asking the owner what they're using. I mean, if you're a legit buyer they should be forthcoming with a lot more info than that.

This business, or rather this collection of domains, is asking three times annual earnings. For a brick-and-mortar that's a reasonable multiplier for fairly systematized business were the owner has minimal oversight on the daily operations of the business.

For an online business, though, that's a high multiple, because online businesses are at higher risk of competition and/or obsolescence.

If I were you, and I were seriously considering moving forward with this purchase, I would pick up some decent books on business valuation before proceeding. If you can lay out a logical case for your price, you can save a lot of money on the purchase.

It sounds like the OP is not asking for advice on the wisdom of this deal, just what type of software could be behind the automation of this revenue.

If you are asking for advice on the deal, however, please go back and read the post above about due diligence and follow it to the letter. More likely than not, you will learn things that will make you question the value being claimed.

And not that this is all that relevant at the moment, but if each domain is making between $5 and $6/month the business is not netting $17k/month. It is netting less than $15k/month once renewal fees are taken into consideration. There are probably other expenses to be considered as well.

If I was making $17,000 per month from all these domain names, I would never sell it to anyone and keep this secret to myself.

I don't know about you, but it seems a bit fishy to me that this person wants any money for this.

Way to much uncertainty for me to be willing to commit over half a million dollars to. They should be willing/able to give you a site by site breakdown with verifiable income. I would definitely look for other, more sustainable online businesses for that asking price. As for the software, no clue. But if they set up over 3,000 sites, I doubt they're all high quality. I'd be interested in knowing if they're all making $5-6 per month or if some are making more while some are making less.

Monetization of domains changes very quickly. What is generating $17k today may not do nearly as well next month. All it takes is a silly algorithm change. Far too risky.

Spend the $500k in property! Much safer for that amount of money.

lets say all is genuine
still it would take you 32 months to earn your own $550000 investment.

Even with standard flippa formula (price of a site is 10 times more than the monthly income) then the price of all these sites shouldn't be more than $170000 ($17000 * 10 = $170000)

My advice is to stay away from all this and concentrate on something more reliable.

Don't forget that this cost you a hefty 30k+ per year in Domain and Whois renewal's on top of your amortization costs AND you need some hosting too.

Automated Blogs are not very well seen so it's questionable how many of those 3000 sites do actually getting traffic and making money. More like the 80/20 rule I guess.
If you can invest, get your own high PR domains from expired domains and expand according to your revenue.

You can outsource content creation and use curated content to make money over Ads and affiliate offers.

You ain't need 3000 domains to make 17k a month.

G.

So hes selling domains at close to $183/domain name.
The monetization method is unspecificed and fishy.
And the cost to recoup the investment is 3 years (3 years is ages in IM).

No one with that kind of money would fall for that.

When you put that kind of money into buying a business, that little bit of information should be divulged before money changes hands. Otherwise, you're buying into a blind method of making money. I would have to know everything about how they are making that money and verifiable proof of that income.

A couple ideas on the automated system.

1) Monetized Domain Parking

It could that this company (or guy) just registered any domain that was related to one industry. At 3,047 domains, this would certainly cover almost every short and long tail keywords.

By parking the domains with a monetary domain service, the Domain Service does all the work and shares the income.

==========================

2012/02/24 Outdated but helpful:

"Here are the top 10, ranked by percentage of people who have used the service that voted it as their favorite. All companies in the top 10 were used by 47 or more survey respondents.

1. Sedo/SedoPro 76%
2. Google Adsense for Domains 70%
3. InternetTraffic 61%
4. HotKeys 38%
5. The Parking Place 37%
6. NameDrive 36%
7. Voodoo 35%
8. Bodis 34%
9. Rook Media 34%
10. Domain Advertising 33%

Amazingly, four of these companies weren't around during last year's survey: InternetTraffic, The Parking Place, Voodoo, and Rook Media."


Domainnamewire.com/2012/02/24/four-newcomers-among-top-10-domain-parking-companies

==========================

The problem with this is your business model is in the hands of other people. As the market changes you have no control.

I had one domain parked that was netting $40.00 per month. Google change their policy, now the domain is banned from Google search results.


2) Blog Spinning Service

If these domains are not parked but are getting traffic and making revenue (adsense?), they must have some unique content which makes me think their spinning their content.

Do a little math - 3,047 domains / 365 days a year = 8.3 domains per day.

So you outsource a blog writer to create ONE blog per day regarding the Industry (aka: plagiarize other people content from Industry websites), then spin that content for a total of 8 fresh blog entries a day.

So each day, someone or a bot updates 8 to 9 domains - everyday.

So a domain is not updated but once a year - not good! So expect to take this scenario and multiply the blog spinning by ten. 80 to 90 blogs per days. 10 blog writers.


Domain registration costs via a bulk register (I use OnlineNic.com) is $7.49 bulk:
3,047 * 7.49 = $ 22,822 annual or $1,901 monthly.


Plus to make this work via Google, you would have to setup several dozen hosting services and/or servers for different IP addresses, as Google would catch on if all hosted under one ip address or even within one region.

Estimate:

$17,000 - $1,901 monthly registration - $??? blog writers - $??? spinning service - $??? servers = $net profit.

Doable I guess. But the winds change quickly within this business model.

You could be left out to dry with 3,047 domains to support.

At that point you'd want to sell the entire business - and sell it fast for maybe $500.000 (see my point).


Best bet is to look at two or three domains. Monitor them for any changes. Read the source code and do a Google search on any unique code. You might get lucky and find some other domains.

You could do a Google industry search - see if any of the domains on SERP 5 through 20 have the same format and content. You could get lucky.

To Your Success!

I believe some of them have type-in traffic, such as from dropped brand names or typos or popular generic names.