$17,000 a month net in a domain

25 replies
Hi:
I received a proposal to purchase a portfolio of 3,047 domain names related to one industry.
I am being told the that the owner is currently making $17,000 a month net.
This means that each domain is making between $5 to $6 a month.
They say all this is fully automated and nothing really to worry about.
They want $550,000

They want too much in my opinion.

Having said that, what automated software could they be using to get this much money?

Thanks in advance.
#$17 #domain #month #net
  • Profile picture of the author entrepreneurjay
    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
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    • Profile picture of the author domainscience
      Originally Posted by entrepreneurjay View Post

      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

      I understand what you are saying.
      These are terms related to one industry and I am just wondering what software that they could be using.
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  • Profile picture of the author gerardojv
    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
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    • Profile picture of the author domainscience
      Originally Posted by gerardojv View Post

      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

      I understand what you are saying.
      But what seems to concern me is that they say this is automated (it is geared to one industry.)
      I was just wondering what software is out there that they may be using.
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  • Profile picture of the author OfficerIM
    Don't buy it if they aren't revealing the domains. Plain and simple. If your gonna buy something, learn how to use flippa.
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  • Profile picture of the author sbucciarel
    Banned
    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.
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  • Profile picture of the author Content Commando
    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.
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    • Profile picture of the author Jon Patrick
      In a deal like this, it is standard procedure to do what is called "due diligence." You would hire a reputable accounting firm to go into the seller's books and analyze his income sources, traffic, expenses, profits... and you would obviously have a complete list of the domains that are part of the deal. That goes without saying.

      You would never buy a business like this without a full understanding of how the money is being made, what software is being used for automation, etc. Nobody spends half a million dollars buying a business on blind faith and the seller's claim that there is nothing to worry about.

      If your due diligence shows that the seller's business is stable and everything is on the up and up, three years' worth of profits is not an unreasonable selling price. This isn't some website on Flippa selling for 6-12 months' revenue. It's a business, and businesses typically sell for 3-5 years' profits.
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  • Profile picture of the author travlinguy
    Originally Posted by domainscience View Post

    Hi:
    I received a proposal to purchase a portfolio of 3,047 domain names related to one industry.
    I am being told the that the owner is currently making $17,000 a month net.
    This means that each domain is making between $5 to $6 a month.
    They say all this is fully automated and nothing really to worry about.
    They want $550,000

    They want too much in my opinion.

    Having said that, what automated software could they be using to get this much money?

    Thanks in advance.
    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.
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  • Profile picture of the author Sean DeSilva
    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.
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    • Profile picture of the author Jon Patrick
      Originally Posted by Sean DeSilva View Post

      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.
      Maybe for an Adsense-website-selling-on-Flippa kind of business, that would be a high multiple. But for a substantive, established business, it's not at all, whether the business is based online or not. Do you think three times annual earnings would be an overly high multiple if you were to buy Facebook or Twitter?

      I realize those are extreme examples, but my point is that for an established business to sell for less than three times annual earnings would be a very low multiple, online or not.
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  • Profile picture of the author Jack Gordon
    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.
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    • Profile picture of the author domainscience
      Originally Posted by Jack Gordon View Post

      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.
      You got it.
      I am asking if there is such a software.
      Of course, they are not telling what the software is and I don't want to make the commitment and go through the due diligence only to find out it was some kine of spam thing.

      At any rate, I offered them $250,000 for the whole thing (half cash and the other half payments with zero interest.) They have not said no, but they have not said yes. (Maybe they are shopping it around.)

      I don't mind monetizing it (I'll hiring a team), but I have my doubts.

      The broker is reputable, but that does not mean much to me.

      At any rate, thanks.
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  • Profile picture of the author talfighel
    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.
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  • Profile picture of the author Gambino
    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.
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  • Profile picture of the author Gene Pimentel
    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.
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  • Profile picture of the author arranrice
    Spend the $500k in property! Much safer for that amount of money.
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    • Profile picture of the author Content Commando
      Originally Posted by arranrice View Post

      Spend the $500k in property! Much safer for that amount of money.
      yeah seriously. I wouldn't trust ANY system that is considered automated. if the last few years have been any indicator of what's to come, there will likely be more Google updates that shake everything up, and could put you at a 500k loss. No bueno.
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  • Profile picture of the author datingworld
    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.
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    • Profile picture of the author sbucciarel
      Banned
      Originally Posted by datingworld View Post

      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.
      ... not to mention that you have to factor in the ongoing huge expense of renewal fees. This offer is simply not worth it, IMO.
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  • Profile picture of the author bwh1
    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.
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  • Profile picture of the author Daniel Delos
    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.
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  • Profile picture of the author sbucciarel
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    Originally Posted by domainscience View Post

    Having said that, what automated software could they be using to get this much money?

    Thanks in advance.
    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.
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  • Profile picture of the author MonopolyOnline
    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!
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  • Profile picture of the author Kydee
    Originally Posted by domainscience View Post

    Hi:
    I received a proposal to purchase a portfolio of 3,047 domain names related to one industry.
    I am being told the that the owner is currently making $17,000 a month net.
    This means that each domain is making between $5 to $6 a month.
    They say all this is fully automated and nothing really to worry about.
    They want $550,000

    They want too much in my opinion.

    Having said that, what automated software could they be using to get this much money?

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