"How much money can I make?" Whenever you start a new online venture, this is an important question to ask. When it comes to buying websites, the answer is potentially thousands of dollars. However, a better question is "how much money can I make in buying websites without creating a serious risk of losing thousands of dollars?" The answer is simple: it depends on the size of your portfolio.
When you first start off in buying websites, you will have to accumulate a portfolio of domains before you can do anything else. This takes time; and should involve many careful decisions.
If you don't immediately have $10,000 to drop into buying a fully established website, it is difficult to envision a scenario in which you could become truly wealthy in a matter of months. However, if you are patient and use common-sense strategies, then you should be able to grow your portfolio of websites over time to the point where you can live a financially-secure lifestyle off of its gains.
With this said, do yourself a favor and avoid trying to make millions overnight. Making millions overnight is ridiculous. It simply will NOT happen. Slower, more careful, and more long-term thinking is more likely to make you a very good income than a mentality that prevents you from looking forward, planning, and being ready for a variety of different possible outcomes.
What Risks are Involved?
There are two primary risks involved when it comes to buying websites. The first type of risk is a liquidity risk.
Liquidity Risk
When you build up a portfolio of websites, your end goal is always to sell a website after it has increased in value. However, in many cases, you won't be able to get good price unless you're willing to wait months or sometimes a few years.
This is where the liquidity risk comes into play: when you move your assets from something that can be used immediately (say, cash or a treasury bond) into something that cannot-say, websites-you create the possibility that you will need money (either to pay bills or to capitalize on a better opportunity), but simply will not be able to access it in time.
This is an important thing to keep in mind when building up a portfolio of websites. At some point in the future, there's a good chance you'll face such a liquidity problem; and will have to decide whether to sell your websites at a steep discount (say, as large as 40%) just to recover some cash to pay bills or buy into more lucrative opportunities.
It is important to note, however, that selling at a loss isn't always a bad thing. Sometimes, it's unfortunate that you don't have the cash available to make a purchase-and instead need to liquidate your websites at a discount-but it can sometimes be worth it.
For instance, let's say that a new top level website becomes available; and the race is on to grab this popular website, but all of your cash is tied up in a large portfolio of websites. As much as you might cringe at the thought of doing it, liquidate some of your websites that you expect won't grow very quickly in the near future; and recoup some of that cash to buy up the popular website. In the long run, you'll be glad you ate the temporary loss.
Fundamental Risk
Regardless of how much money you have and regardless of what strategies you employ to construct your website portfolios, it is hard to avoid the fundamental risk inherent in dealing with any class of securities. In this case, you need not look any further than the bursting of the Internet bubble.
As the Internet became wildly popular and cable and DSL connections became more common, investors dumped hundreds of millions of dollars into websites. Not surprisingly this massive jolt to demand, this skyrocketed the value of websites, making it possible for Internet entrepreneurs to reap a profit during a small window of opportunity.
Unfortunately for many Internet entrepreneurs, however, it wasn't possible to predict when the bubble would burst; and how severe the consequences would be when it did. As a result, many got left with large portfolios of websites that rapidly lost value over the course of a few years.
This, of course, is an extreme case, but it is a powerful illustration of the fundamental risk that is inherent in any portfolio of assets, including a portfolio of websites. So keep this in mind when constructing your online website properties.
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