There is so much made about the amount of time and money that should be put into passive income streams for them to actually qualify as “passive” income, but let's forget about all of that for a second. Let's instead focus on making smart passive income, which to me means minimal investment, high return. For example, if I am putting no money and only five minutes into creating a passive income stream and I make five dollars, to me, that's still passive income (five minutes of your time for $5 is $150 an hour).
On the other hand, if I invest $1,000 and a month but turn a $100,000 profit, that is still smart passive income in my book. The point here is that it's not about your initial investment or overall profit, but instead it's all about your ROI—Return on Investment.
Smart Passive Income is ROI Heavy
That's because your ROI is making the best use of your time and money. It's essentially a passive income calculator that will help you understand if you're making smart passive income or just toiling away at a fruitless venture. The higher your ROI, the better off your passive income businesses. Actually, the higher the discrepancy between your investment and your profit, the better off you will be in any business.
With that in mind, it's important to find a passive income stream that will provide you with the perfect balance of low investment and high turnover in order to make smart passive income i.e. get a big ROI. One of the best ways to do that right now is to flip websites.
What is Flipping Websites?
When you flip anything in the investment world, it essentially means you are buying or creating something at a low cost and then selling it down the road for a much higher profit. Essentially, you are creating value for the product or service and then cashing in on that value. Of course, in some markets, the value is created for you (e.g. holding onto prime real estate until the development market hits that area and then flipping it for a profit).
Flipping and turning are pretty much used interchangeably in the industry, so you might hear the terms “website flipping” or “turning a website.” They mean the same thing. So for our purposes, when you flip a website, you will either create it or purchase one for a low value and then sell it down the road for profit. Either way, you can usually make up to 10 times the website's monthly profit on a sale, sometimes more if the site has huge potential or a buyer thinks they can do better.
This means that if your website is pulling in $10 a month, you can sell it for $100. Not bad. But if your site is raking in $1,000 a month, you can sell it for $10,000. This is where the huge valuation come in that you always read about in the paper—Facebook acquiring “X” site for $3 billion—the numbers can be staggering.
Buying a Website to Flip for Smart Passive Income
If you have some investment capital sitting around and you don't want to toy or bother with creating your own website from scratch, you can always purchase another person's website and then flip it for profit. Of course, there are some things that you'll have to look for such as high traffic, high conversions and a decent profit, but once you get that (the website owner will provide you with all of this if they are interested in selling), the rest is up to you.
Unfortunately, your investment won't typically stop at buying the website. Because you have to add value to it (unless the market will add value itself, in which case you only need to keep the money flowing in by maintaining the status quo), you'll likely have to implement new systems or provide new products or services. Something has to drive up the revenue in order for you to be able to make smart passive income by flipping it—this is where business sense and savvy come into play.
Of course, you could always hire someone to maintain and run your website for you, thus giving you some time to let the profits build up and value rise, but this will cost you money as well. Either way, this venture will require either a time or monetary investment, but the ROI is worth it in the end, making this an extremely smart passive income stream for anyone that has the means.
Creating a Website to Flip for Smart Passive Income
If you don't have the capital to buy an existing website or if you're great at creating websites for scratch, you can simply start your own. The good news here is that the initial investment is usually pretty cheap. You can get a hosting site package for about $4 a month and then build your website through drag and drop control panels that make it easy, even for novices.
You can also add shopping carts and other features to your site, whatever you will need to make it profitable. If you're an affiliate marketer, you can turn this into a niche site. If you're selling intellectual property, it's a good idea to turn this into an authority site. Most authority sites will run freemium memberships (where you give certain info away for free but make members pay to join up and access private sections of your website).
Whatever you decide to do to make your website profitable (even if it's outsourcing the work to someone else), the key here is that the more profitable you make it, the more you can sell it for and thus, the higher your ROI will be. As mentioned, the higher your ROI, the smarter your passive income stream. Get a few smart passive income streams going and you will be well on your way to Easy Street.
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