Finding strategic ways to invest that provides us with great returns and doesn’t require any leverage is pretty hard to come by. But with what Liz and I teach here at EBusiness Institute, there is a way. And this is done through investing in “online real estate”.
Today, Liz and I walk you through an example that compares your typical real estate investment, to an actual website deal we personally invested in. We think you might find it interesting comparing the numbers, and seeing what’s actually possible when investing in your own website portfolio.
Liz Raad: Today, I want to challenge your thinking on what you believe is a good return.
Matt Raad: Ok, I’m interested Liz!
Liz: Yes, because, a lot of us are property investors, or share investors. We are used to putting money into a marketplace.
Matt: Business investors, don’t forget them.
Liz: And business investors, yes.
Matt: That’s us!
The Challenge With Traditional Investing…
Liz: But we’re used to putting money into a marketplace and often having to leverage that money up.
So, to buy a house or to buy some real estate, if you want to invest, then you need to come up with your deposit, and then you need to borrow a lot of money. For a lot of places now, $800,000 or $900,000 or at least half a million dollars you need to have in borrowings in order to invest in a lot of markets and get a decent return.
Matt: Here in Australia.
Is There A Better Way Than Borrowing Large Sums Of Money?
Liz: Yes, here in Australia. So, I want to challenge that thinking. Is there another marketplace where you can actually invest a lot less and get a similar return or even better? And that’s what Matt and I found when we discovered what is basically online “real estate”. We invest in websites. We buy websites, we look for websites that we can add value to. We do a renovation, very similar to a property.
Matt: Just like a property, yes.
Liz: Yes, we renovate the kitchen, bathroom, add a bit of paint. That’s what we’re doing with websites.
Matt: Nothing over the top. A couple of weekends work.
A Recent Website Investment Example…
Liz: To give you an example, we actually recently did a deal where we bought two websites for $45,000. Now, if we compare that to buying a property – if we’ve got $45,000 to spend, we can probably leverage that up to $800,000 or $900,000, but we’re going to have to borrow all that money. And our returns are probably somewhere in the order of maybe $3,000 to $4,000 a month, making somewhere around $1,000 a week?
Matt: On the property, yeah.
Liz: On that property.
Matt: If you rent it out.
Buying Websites = Higher Cashflows…
Liz: So now, these websites we bought for $45,000, we actually renovated those and we’re making $7,000 a month in cashflow.
Matt: As opposed to real estate, which would make, what? $3,000 to $3,500 a month?
Buying Online Businesses = Quicker Returns + Payback…
Liz: Yes. So we’re making $7,000 a month in cash flow from those websites. Basically, we didn’t borrow any money, and we’re going to pay that back to ourselves as quickly as possible. So, at that point, when we’ve paid back in the cash flow from that investment.
Matt: Which is nice and quick.
Liz: Very nice. Our risk is very, very reduced. We don’t have money out in the marketplace anymore. We’ve paid ourselves back. We’ve got this asset sitting there generating $7,000 a month.
Buying Websites = Can Be Passive Cash Generating Assets…
Matt: And we should add, with those websites we’re not working on them ourselves each day. We’re outsourcing that work, and really even the outsourced work wasn’t that much. It was just posting some content on there every week, that was it.
Liz: Yes. So, we found strategic ways to invest in these websites so that they make money in a way that doesn’t require a lot of work from us.
Selling Your Website = Valuable + Highly Saleable Assets…
Okay, so we’ve got our website. Now, a year later, we decided to sell that as two websites and we sold them for $150,000. We made a profit of around $190,000 on that deal in one year. When we compare that to our real estate deal…
Matt: …For an outlay of $45,000. We should mention that, because we’re comparing it to real estate where you might have to outlay up to $900,000.
Liz: Plus all the expenses. I mean the stamp duty alone on a $900,000 house, we’re looking at probably $40,000 just on stamp duty or more.
If you’re interested in learning more about how you can buy online businesses, then make sure you check out our Free How To Buy Websites Training Course Here.