List of unapproved resources:
- Income Store (Ponzi scheme)
Advice from the Hui:
- Some info on what i’m doing in angel investing space. couple things: 1. this is high risk investing. only investing $ that i can afford to lose which is 1-5% of net worth spread across 20-50 investments (1-2.5k per deal). accred status investor level only. 2. i have a day job which i like but most investments are in the technology startup space which i have a lot of direct insight, network and technical depth on than most, 3. how i invest – i invest with 2 VPs who syndicate deals and i invest as LP, they provide deal sourcing, vetting and access which i don’t have time to do. been investing with both since 2015 with good experience/track record, investment philosophy.
Buying (Breast Feeding) Websites for Cashflow w/ Robert McKay
Empireflippers is ok but I’ve always felt like they target uneducated buyers. They do a great job presenting the businesses but they will list for any seller that signs their contract.
FEInternational actually has standards for what they will list. I look at their listings regularly and none of it is trash.
Flippa is like craigslist for internet businesses. There are a few reputable brokers that list on there but the majority is listed by owner making up numbers.
Here is a failed one – https://authoritywebsiteincome.com/income-store-ripoff/
Clues in the news:
Here is my list:
http://thefbabroker.com/ —- Amazon FBA only
Corporate lawyer who went to an ivy league law school, worked for a wall street law firm, got involved in the internet boom, worked for a wall street energy trading company and then a hedge fund. After 20 years, we moved to the Midwest because my wife wanted to live in a more rural setting similar to how she grew up. I’ve been in Omaha for the last 6 years working for a large technology company and investing in multifamily apartments (my linkedin bio link is below). Because my multifamily portfolio grew in value so quickly and MF assets are currently so expensive, I began looking for alternative passive income producing investments to invest the profits.
I started a new model just over a year ago experimenting with my own money (~$200K – no debt) and I’m returning roughly about 20%. I raised money in October from friends and family and we started having positive cash flow in February (to be paid out in March). I conservatively project returning about 13-14% to my investors on an annualized basis.
Now that I’ve had success with this model twice, I am ramping up to raise money additional money ($500K – $1M) for the next round of investment.
Here is a quick review of my current passive income venture:
– I buy existing websites that are cash-flow positive;
– I hire a developer/company (much like a multi-family property manager) to manage the sites and to assist in increasing traffic;
– the developer optimizes the SEO and content of the site to increase traffic to affiliate marketing partners;
– the developer creates a complimentary site to increase synergy between the sites and increase revenue; and
– we then add content monthly to the site and continually optimize traffic while reaping affiliate marketing income.
Unknown Speaker 0:00
For a limited time until I kick off my deal hunting season next year, I want to get on a call with as many simple passive casual listeners who have not connected with yet I want to see if there’s any way I can help or at least demystify this world of real estate investing to expedite you on the road to financial freedom new friends book a call at simple passive cash flow calm slash talk.
Unknown Speaker 0:22
Unknown Speaker 0:23
a story about a dude named Lane he moved to the mainland and bought one place to stay and then one day he went to try to rent them out and then he became one real investor Hey guys,
Unknown Speaker 0:35
this is Lane with the simple passive cash flow podcast today we got Robert McKeon the multifamily investor also that I met through kind of my travels, we both do the little bit of the same thing but he’s got a little bit of the more interesting background. And and today’s gonna be a deep dive into the topic of e commerce websites. Here’s kind of the overview from the investor’s perspective. You know, you buy a single family home, it’s distress You fix it up? Well think of it like the website is sort of distressed or mismanaged or there can be some value add. So that’s kind of business at Robertson today. Why don’t you give us a little bit of your corporate backstory there, Robert, and so people get a sense of where you’re coming from.
Unknown Speaker 1:16
I grew up in a fairly rural and humble circumstances. After college, I went to law school in New York City. And then New York City, I
Unknown Speaker 1:27
found a home and was able to work
Unknown Speaker 1:31
in a big law firm and it with New York offices. So I had offices in New York, Washington, DC and London and there I did mostly Wall Street work. And my big client was a company called Bear Stearns, which you may remember from. They were the first investment bank to go down in 2008. go bankrupt anyway. They will stop being my client long before then, thank goodness but I did that for about eight years. then moved on to energy, got involved in the internet boom was counsel to a number of companies. That’s an offer from a company at that time called AOL, which is now AOL Time Warner and worked a lot with new technology executives trying to build up this thing called the internet. And then from there, worked for an energy trading company that bought the assets from Enron, when Enron went bankrupt, and was able to capitalize on that what works for hedge funds and a few years ago, my wife and I decided to go to a more rural setting similar to where we grew up. And what by been in Omaha, Nebraska for over the last last five or six years.
Unknown Speaker 2:44
Was that kind of home for you? Or?
Unknown Speaker 2:46
No, she’s no but it was closer to home and it was the right job opportunity popped up. And so we took advantage of it. Were a quick plane ride away from where we both grew up.
Unknown Speaker 2:59
So what does the Real Estate Investing kind of come in. Did you? Did you do the internet stuff before? Or was it after?
Unknown Speaker 3:06
My first venture into the internet stuff was mostly on the legal side, I was helping people set up stock option plans set up their companies and that type of thing. And that was about 1015 years ago, well, 15 years ago now. I started multifamily investing when we moved here to Omaha, mostly as a hobby. And I saw that there were certain markets that were biggest one being the Dallas Fort Worth area. Another one was western portion of South Carolina. There were just a few areas that just really took off. And so I focused on that for, I would say most of the last five years. And it’s clear that cap rates have compressed to the point where we’re, they’re probably the best they’re going to be in my lifetime. And so about a year ago, I started looking for alternatives to multifamily investing because i cap rates were just so high. It was super expensive. or, excuse me, cap rates were so low, the price is relatively high. So I started looking around for alternative investments. And I tried two different things. And this was I had a friend suggested me Hey, why don’t you look at buying websites that are already producing money? And it’s a you know, it’s it’s a higher risk investment than in real estate, but it’s also a lot more fun. So I started looking at that and saw that the multiples there were, you know, of EBITDA were were frankly low compared to corporations, you know, smaller companies buy and real estate. So I thought why not give it a shot and about a over a year ago, I bought my first sight. And, and I was surprised at how well it was has been doing, it’s performing extremely well. And the model was similar to real estate and then I hired a asset manager or a website manager to take care of the website form. And that asset manager gets a piece of the profits of what I make. So they’re properly incentivized. And it’s just been a great model. It’s been exciting. And so I did my second investment, I got a group of family and friends together and let last fall and we bought a larger website. And that seems to be going really well. It’s, it will
Unknown Speaker 5:23
kind of catch people up. So
Unknown Speaker 5:27
that, you know, kind of still catch up on what we’re talking about where we’re kind of talking about, like mom pot investing for websites here. Maybe kind of go over the, like the amount of capital needed to do this.
Unknown Speaker 5:39
Okay, the first one. Well, first of all, it’s a higher risk
Unknown Speaker 5:43
investment because unlike property, you know, the website can disappear from day one. From day one to day two, where’s property, the earth generally isn’t going to go anywhere unless there’s a huge earthquake or a volcanic eruption, which in Texas, there are very few volcanic eruptions.
Unknown Speaker 5:58
Right, right. I’ll interject right there. You know, that’s kind of why a lot of people, they come to real estate as sort of the end game. I’m, you know, a lot of people that I’ll have, you know, I still do those, those free intro calls to learn people’s stories and a lot of stories of know, they either have a lot of money, you know, they got hundreds and hundreds and their 401k. And they got to put it into a hard asset or a lot of business owners to that sounds kind of curious if you kind of did the website stuff for the real estate, but it seems like all roads sort of leads the real estate as an end game, it’s more of a conservative place and you don’t make gobs and gobs of money, but it’s a safer, safer thing. Yeah, it’s
Unknown Speaker 6:38
definitely a safer thing. And if the if the property does or the investment ends up not working out, you’ve always got the hard dirt as as security depending on the strength of the loan that you have and the amount of the loan that you have on the on the asset because websites are a little higher risk. Right now we don’t ever that bad at all. It’s just we invest capital. And we don’t take any loans don’t take on any debt. Because that would take make already risky investment or a more risky investment, it
Unknown Speaker 7:13
gets to the first transaction, you know, how much was it? And then where did you find this thing? Where do you what is the what website does somebody go to
Unknown Speaker 7:20
the first thing I was looking for is a niche, something that was very specific, something that wasn’t going to go away. Regardless of the economy and how having lived through 2008 I lost essentially half my portfolio value in 2008. I’m a little bit risk averse and and try not to lose money whenever I can. In fact, that’s my first rule of investing is don’t lose any money. But there are several websites or brokers that you can go to Flippa is one that that’s the one that I use. There are several others to which I can I can provide you lane and you can provide to your Viewers and your listeners and their what they do. It’s like a typical real estate broker website and that they just put up, flipper puts up on their marketplace, the different websites that are for sale. And it talks a little bit about the characteristics and and the number of investors and then or not, excuse me not the number of esters, but the number of visitors and customer, the analytics, the amount of money that it’s making the cost. And you start your due diligence, just like you would on a real estate or a piece of real estate property. And you can verify different things and so verify their numbers, you can go to Google Analytics to make sure that the number of sessions they have are corrected how long those sessions are. And you can get bank account statements to see you know, if AdWords is their source, you know how much AdWords is depositing in their account. And and pursuant to, you know, which visits for me the big issue was topic and so I began brainstorming and brainstorm with everybody that I knew, hey, what’s something that’s gonna stick around? It’s not gonna be, it’s gonna be here, regardless of where in a great economy or a poor economy, what’s something that people are going to have an interest in and going to bust continue to buy things for. And what we came up with was nursing. And by nursing, I mean breastfeeding. And so when women breastfeed after giving birth, there’s a number of products that they need, or that makes breastfeeding easier. There’s a number of, especially if you’re a woman who’s working, there is a number of items, there are a number of items you need to pump breast milk, and keep it and do it in a in a way that’s sufficiently private but also sufficiently effective. And so you’ve all become an expert in this right. I have actually. Well, yes. It’s a it’s a beautiful thing. I’ve hired somebody to add content. The woman who adds content is very passionate about breastfeeding. Incredibly competent at writing. And she creates content for the website. And then we just link, you know, if we review certain products like breast pumps, or or pads, or creams, we just link to right now it’s Amazon. And if somebody buys off, you know, that product pursuant to that link, then we get a piece of the profit. It’s just it. And that’s the business model. Simple as that. And I’m just surprised at how I’m I’m very surprised at the return that we’re getting. It’s it’s double digit returns. And that doesn’t seem to be going anywhere soon. And so that’s what made me excited about it and made me think maybe there’s an opportunity here and that’s what led to my
Unknown Speaker 10:52
I was always frustrated by the numerous investing education programs out there who gouge their investors, charging them five times. Thousand 10,025 and $40,000. I don’t know about you, but I thought it was completely wrong when they trick people actually had them call their credit card providers to get a credit line increase to pay for the program. Many of these people could not afford these expensive coaching options and should have used it as a down payment for the first investment. If someone only had 20 grand they should use that to buy a rental to get started. Let me make one thing clear our mastermind is not for you if you’re broke, it’s a cost effective way to mitigate mistakes when building your portfolio. People in this group are going to be a pre selected population of professionals and high net worth individuals. You’ll be a good company that is after you apply and get in at simple passive cash flow.com backslash journey and yeah, if you’re lonely in Chicago to find motivated friends who want to do more than sit at their w two jobs collecting and paycheck then go home and watch Netflix all day because all they can afford is 899 a month on their digital entertainment budget. This is a place for you to Passive cash flow calm backslash journey just so we don’t leave the listeners at home. So we kind of mentioned a couple terms there first, content marketing. So Roberts paying for some gout type up some articles for him. So that supposedly supposed to rank on Google or draw people to the site to to get traffic to the site. How’d you find that person? Is it American or
Unknown Speaker 12:27
she’s American? She’s out of Pennsylvania. She’s a stay at home mom. She was a friend of a friend. I did put out the word that I’m looking for someone who was a good writer, went on what used to be oDesk I forget who acquired oDesk. But when they’re asking for referrals, I also went to several colleges in Pennsylvania, asking if they had referrals for professional writers. Basically, the English departments there and then they went to end through a friend of a friend, I found her. She’s incredibly sharp, incredibly competent. And anyway, she blew me away. So unfortunate ever
Unknown Speaker 13:10
and you’re paying per word or per hour? Is that how, and what can I really read or article?
Unknown Speaker 13:19
As we started getting more sophisticated on the Google searches and the and the specific Google searches we were looking for, she started to get started become very skillful at figuring out which articles would rank number one in the Google search, and at that time, I started paying her percentage. So you know, whatever. So let’s say she writes an article on restaurants, or certain brand of breast pumps and we make $100 through those referrals, she’ll get $10
Unknown Speaker 13:54
Okay, so it slowly became a sort of a sales commission or actually Equity partner in a way, right?
Unknown Speaker 14:01
Yeah, don’t for those specific products and you know, we have limits on how much she can make and over time that she is definitely incentivized to create new content and to have that new content refer traffic to products about it and she’s fantastic. She’s gotten after be a few times for for not paying attention close enough. And
Unknown Speaker 14:22
the other thing that we’re chatting about there was this term called affiliate marketing. And I think a lot of times this affiliate marketing is kind of the dark side of the internet it’s kind of sales gone bad where guys will just build up this huge audience around just read them people and other people’s products and pick a commission maybe like 5% or 10% of or whatever. And, and that’s essentially what you guys are doing. You guys are drawing traffic in sending it to Amazon and picking up a few pennies off every transaction. And it’s kind of like what I do on my website a little bit of Although I only get like, you guys come to the website, there’s this kit link, bunch of cool books to read some cool gadgets and gizmos that I have on my products tab and people will click on it and I’ll make like a $25 amazon gift card every quarter or something like that. Like apparently you guys don’t buy much like it’s not a targeted thing, obviously. Or maybe it is or just yet just like clicking on that stuff. But that’s kind of how the internet works, right draw draw traffic. And that’s it. That’s that’s what an affiliate website is
Unknown Speaker 15:35
key to getting high traffic for these content marketing websites, is getting the right Google search and being number one or number two, ranked fourth at Google search. So you have to do a lot of Google Analytics acquiring these that
Unknown Speaker 15:49
website like how much was it to acquire it And is there any debt associated?
Unknown Speaker 15:55
So no debt
Unknown Speaker 15:57
that right up front, I’m just have seen so many bad things happen in my career with people being over levered. I’m just not a big fan of debt for personal investments. This one cost a couple hundred thousand dollars. And this initial one cost that much. And what we did is we found the website, or I found the website on flipper, and started my search and looked at, you know, I asked for specific things like, like I mentioned, bank account information, Google Analytics, seeing how long their visits were, I looked at their search engine optimization. After I did the research, I saw what they were making, I’ll just give you the full numbers. They were roughly making roughly about $10,000 A month after expenses. And so the market price at that time was about 20 times monthly expenses. Now, if you’re going to buy a small business, or even a larger business, you’re looking at about eight times 10 times EBITDA, and so you know, I’m paying less than two times even so it’s Let me step back. I’m mixing up numbers here that might confuse people. When you’re buying a larger business, you look at annual EBIT, da. And so if you’re if you’re paying 10 times EBITDA for a business, you’re paying essentially 120 times monthly EBIT. So what does that stand for? earnings before income tax depreciation, and I forget what the stands for. But that’s basically your profitability. You know, basically your cost minus expenses, similar to like a, like a cap,
Unknown Speaker 17:27
like a discipline, a cap to a property,
Unknown Speaker 17:30
basically, it’s a measure of profitability. And so with websites because they’re a smaller business, it’s usually cash businesses. You can see, okay, here’s what here’s what our revenue was, here’s what the costs are, and then that split and so the market price now for a website that’s fairly profitable is between 20 and 24 times the monthly profit that that website makes, and so it’s, they’re basically selling at about 20 to 25%. Of what The value of an ongoing, larger business. So
Unknown Speaker 18:02
this thing is making 10 grand a month. So hundred 20 grand a year, take us to the calculation,
Unknown Speaker 18:09
the market price generally is about 20 times the monthly profit 10 times 20 is 200,000. And since that time we’ve been able just like a property, we were able to optimize it for traffic and content is a game plan can I just sell it at once you hit a certain point because like apartments like you know what you try and use your you’re trying to double your investors money, right. So that’s
Unknown Speaker 18:31
kind of taken maybe bump in your value up by like 10 20% or so to get
Unknown Speaker 18:37
that this isn’t going to be a longer play for us. This is going to be a cash flow play. And we’re going to keep it probably for at least five years, I would analogize this we bought the property or we bought the website, essentially as a class C property. We’re net we’ve moved it up to a class B and I don’t know yet if we have skills to move it up to a class a property super high end At that point we may need to sell. Right? It’s
Unknown Speaker 19:02
similar to like a, you know, putting together a Class A Class B apartment building, do the rehab, can really make it much nicer. So like, you know, taking your, your breastfeeding website and you do the affiliate marketing, do the content producing. I mean, really, there’s, there’s not much more you can do, right? I mean, maybe, maybe you and I can get together makeup podcasts on it or something like that, right. But
Unknown Speaker 19:28
we do have three women who are making videos for the website video content, and that there are things that you can do to make the content shift up. But ultimately, if we were to sell this, it would probably have to go to a but somebody that could tuck it in nicely to their larger business of servicing women who are
Unknown Speaker 19:48
have just given birth to one point, do you think about maybe putting debt on this thing or is that available to be able to cash flow long term once you stabilize it?
Unknown Speaker 19:58
Thanks for just getting into the cash flow game. Excuse me just getting into the website game give me 25% of annual profits in debt and another one offered me 30% but they both wanted a personal guarantee meaning that I would have to back up the loan so it wasn’t really a loan for the website it was a loan off of my individual credit
Unknown Speaker 20:18
to the game for you is most see stabilize it and if it’s cash flowing, keep it but if not sell it or which way are you leaning towards?
Unknown Speaker 20:26
probably sell it eventually. But this is a long term hold.
Unknown Speaker 20:30
But a lot of listeners are kind of listening here, kind of the engineering type and you know, they got a day job. So what they’re doing is the e commerce thing where they they’re setting up the Amazon storefront. Are you doing that with your websites too? Or is that maybe a potentially potential partner opportunity? When I’m kind of thinking of here it’s kind of like if you buy a 100 unit apartment building, and you’ve got this empty lot next door, build some self storage facility there, some small one and then you know, it’s kind of like another revenue stream or You know, right now you’ve got this website and you’re doing affiliate content, you’re optimizing SEO, but maybe you can bring on some other guy who’s really good at the Amazon stuff and a lot of other listeners are probably thinking to themselves, alright, there’s these like, kind of techniques that you need to acquire throughout the year, do this in when you’re talking about something like, let’s just say the social media part, we’re doing a Facebook group, right, but don’t know how to do that don’t have a clue. Well, do you know how to do that? Or did you just outsource it’s kind of like, like a property manager, right for profit. You’re like, I have no idea how to do it and addiction, to be honest. I don’t have a clue. Like, I just give it to them. But I say go and do it. Is that sort of the same thing that’s happening here? Or do you have to
Unknown Speaker 21:45
Unknown Speaker 21:46
to that’s why we hired the coaches. We needed one on one coaching. There’s websites out there that are cheaper. The reason I went with $200,000, that’s a level two to 500,000. There are websites out there you can buy for less than 10,000, but they’re definitely
Unknown Speaker 22:00
work. So we’re like the mom, Paul, the sophisticated mom Paul investors going to is it kind of 100 to $500,000 range or
Unknown Speaker 22:09
hundred to 500. Once you get about 500, you’re starting to see institutional money coming in. Thanks
Unknown Speaker 22:14
for kind of chatting about this for us. I know it’s kind of outside of the real estate realm. And I think for a lot of guys, they live in like California or places where you’re not near the action. This could be an option for investing.
Unknown Speaker 22:28
I’m having a lot of fun learning a new area. It is it’s not easy, but it’s not so overwhelming. So you’re you’re still working the day job. That’s right. And and you’re still doing the apartments a
Unknown Speaker 22:39
Unknown Speaker 22:40
What’s the percentage of like your portfolio of real estate and it’s kind of screwing around and tinkering with this stuff. I’m about 40% real estate. Oh, and then we’ll get a list of shimmy over that list of brokers and we’ll put that in the show notes. All right, guys. We’ll we’ll catch you next time. Make sure you sign up for that who deal pipeline club And also if you’re interested in joining our next mastermind journey course 27 weeks of content but the biggest thing is the bye week be coaching calls and myself and the other participants. Alright we’ll catch you guys next time bye
Unknown Speaker 23:31
This website offers very general information concerning real estate for investment purposes every investor situation is unique always seek the services of licensed third party appraisers inspectors to verify the value and condition of any property you intend to purchase. Use the services of professional title and escrow companies and licensed tax investment and or legal advisor before relying on any information contained herein information is not guaranteed as an investment there is risk the content found here is just my opinion and things changed. And I reserve the right to change my mind. Above all else, do your own analysis and think for yourself because in the end, you’re the only person who is going to look out for your best interests.
Transcribed by https://otter.ai