Undervalued Websites? Buy it, Fix it, Flip it!

It's no longer just real estate, even virtual estate can be undervalued. NYTimes article reported that Dave Hermansen did not own a bird or a cage when he bought bird-cage.com, an online store, for $1,800 three years ago. He simply saw a Web site that was “very, very poorly done,” and begged the owners to sell it to him. He then redesigned the site, added advertising and drove up traffic. Last December, he sold it for $173,000.

Mr. Hermansen, 30, is among the latest wave of entrepreneurs who, like the day traders and real estate investors before them, are looking to make a lot of money without much effort.

They use little more than home computers and free software to buy Web sites that appeal to a small and specific niche. Then they fix up the sites with hopes of reselling them for far more than they paid.

The changing economics of the Web have made it easier to find and exploit niche communities on the Internet. The Internet boom of the 1990s spawned companies like Pets.com that were Web versions of brick-and-mortar stores. They required stockpiling products and shipping them to customers. But that model came crashing down with the Web bust of 2000.

Since then, building niche Web sites and small-scale online stores has become cheap and easy. Free software, advertising systems like Google’s, and “drop shipping” services that allow Web site owners to handle products through a third-party supplier, have lowered the cost of doing business.

Instead of selling goods and services, analysts said most flippers are looking into the easiest way to make a quick buck, by tapping into specialized advertising.

Article and Image Source New York Times.
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