#TBT — Buying Websites: The Most Overlooked Tax Loophole & Cash Positive Asset

This episode is about what ryan has come to conclude is the most overlooked investment opportunity in the world: cashflowing websites. They are sellable and buyable as assets and are somehow taxed differently!

Ryan talks to Ken Courtright, Founder of Income Store, an inc. 500 and 5000 Fastest Growing Company. They have built and manage a 2000+ portfolio of revenue producing websites and have big plans for the near future.

Key Takeaways

[3:26] How big is Ken Courtright’s… portfolio? Is 800 to 1000 contracted revenue producing website and an additional 1000 outright personally owned good enough for ya?

[4:38] Ryan buys websites at about 2 ½ times their yearly profits, looking for websites that have a very specific target market. Ken weighs in on those numbers and shares his his own.

[9:10] You don’t know tech? Don’t buy a website on your own…

But to anyone looking to buy websites Ken recommends going to www.smrush.com and look at 2 things:

1. How many backlinks are being added monthly? (Take a screenshot and come back 90 days later — you want to know that there is an expansion of influence)

2. Is the website growing and healthy?

[11:59] Ryan personally looks for websites that serve a specific niche market or audiences to develop a business around whereas Ken looks for more competition, why?

There has to be so many competitors in the space that no matter where the landscape shifts in the niche, the competitors will do the trial and error for you!

[16:36] Ryan and Ken recap why revenue producing websites are such fantastic assets:

1. Immediate ROI of 33-40% (!!!!)

2. Profitability scales in very short spans

3. Assets taxed differently

Disclaimer: Neither Ryan nor Ken are CPA, associated with CPA or accountants in any regard and no one should understand these statements to be financial or investment advice. In fact, Ryan advise you do nothing of what he talks about, ever.

In 48 of 50 states in the US people can write off the purchase of revenue producing websites in 3 years, and as of January 2019, the full amount of the purchase can be written off in that same year — this effectively means a 50% ROI as soon as you buy it.

There are downsides to watch for as with any industry which Ken openly shares.

[25:08] Ken shares his overarching play which was never about managing a site, it was about managing a massive portfolio of millions of eyeballs so we could crossmarket different things.

Goal number 1 was a thousand sites.

Goal number 2 is cross marketing between assets and generating legitimate backlinks, growth and free traffic.

[30:50] Ryan asks why that was not the front and center of monetization models. Ken talks about the winning moves model.

1. Solidify the team

2. Generate an email list from every single asset

3. Any site that is Adsense only will be added an affiliate

4. Bypass Google Ads

5. Cross market

[33:49] Ryan asks what their biggest acquisition was?Ken explains why size doesn’t matter: what makes websites so sexy to a seller is that they are funded immediately and in full.

In that context, for a client with a million dollars, it is better to build a portfolio where they get 3 websites on which they can then do cross marketing rather than buying the one 1 million dollar monster.

Ken does suggest to stay away from anything under 100k because the website will not have enough data on its own life to be reliably predictable.

[39:00] Ken breaks down the Income Store model:

1. Take the client funds and buy websites at 2.2 to 2.4 earnings

2. Lock the websites in a consulting performance agreement

3. Permit the sale of the website at anytime for the buying price plus 50% of the overage growth

[43:10] Ryan thanks Ken for everything and shares how this business model might be one for him to pursue full time someday.

Thanks for listening!

Mentioned in this episode

Capitalism.com

Income Store