Profiting from a website renovation

Investors in the US are finding that a classic money-spinning strategy – buy a property, do it up and then sell for a profit – works as well for websites as traditional bricks and mortar.

Investors in the US are finding that a classic money-spinning strategy – buy a property, do it up and then sell for a profit – works as well for websites as traditional bricks and mortar.

The New York Times tells the story of Dave Hermansen, an investor who bought an online bird-cage store, the appropriately named bird-cage.com, for $US1800 in 2005.

Hermansen saw the site as a “fixer-upper”, with plenty of potential for value enhancement. He redesigned the site, added advertising and lifted traffic, and put it on back on the market in December. The result? A sale price of $US173,000 and a very handsome profit.

The idea of web site investing is catching on thanks to several big ticket sales of originally home-made blogs, Wired News’ $US25 million sale to Conde Nast and PaidContent’s rumoured $US30 million sale to Guardian News & Media among them.

Another web property investor, Peter Davis, says he generally holds a website for a few months before selling, but it can be much quicker – on one occasion he bought a daycare forum for $US1500 and sold it for $US3500 just hours later.

“I used to make my own web sites and sell them, but then I realised, ‘Hey, this is much easier than making them’,” Davis told NYT. “It’s as simple as buying a web site from someone and making it more attractive. It’s about creating value where there was none.”