The temptation of selling one’s site frequently comes up and I’d like to make an argument for why you probably should not sell your site in this environment.

It’s safe to say from a financial perspective, anybody who sold any type of asset from 2008-2011 probably wishes they had held on. Stocks have rebounded by over 130% since the S&P 500 hit 666. Real estate is roaring back in the major cities and is now spreading its fever back into speculative cities such as Las Vegas and Phoenix Even gold, which produces nothing is up over 50% since 2008.

The one thing that hasn’t increased is interest rates. The 10-year bond yield (risk free rate) has fallen to under 1.7%, the best 7-year CDs are at 2%, and money market funds are around 0.2%. With interest rates so low, people have been saying 10+ years that interest rates must go up. Yet, one look at the historical 10-year bond yield chart shows that interest rates have been going down for 30 consecutive years!

Savers and retirees on fixed incomes have really been the victims of such a low interest rate environment. At the end of the day, the value of an asset is a function of its earnings. If your asset’s earnings are on the decline, then the present value of your asset is also in decline.


Back in 2000, it used to only take $500,000 to produce $30,000 in risk free income via a 10-year US Treasury bond. It now takes roughly $1,750,000 to generate the same amount of income! I don’t know about you, but the need to try and accumulate 3X more in assets seems quite daunting.

As a result of such yield compression, investors have turned to buying dividend yielding stocks, higher risk bonds, emerging markets, and real estate again to generate income. What’s more relevant to us is the move by small investors and listed companies alike in buying revenue generating websites.

There is currently a tremendous valuation discount for buying websites. Paying 1-3X annual operating earnings, 1-2X annual revenue, or 3X net profits is the norm. Meanwhile, the earnings multiple of the S&P 500 is now 17.5X. Let’s discuss the reasons why sellers are willing to sell for such low multiples.


* Dependency on Google. Everybody has been positively or negatively affected by Google if they’ve been around for at least a year. If you derive a majority of your traffic from Google and Google’s algorithms decide they no longer like your site, there goes the majority of traffic and income. There is HUGE paranoia about the overdependency of search engines which I think is overblown. If you rank well with some search terms, you will probably continue to rank well over the long term given you will have more content linking back to such relevant posts. Google has helped way more websites than it has hurt, and there is often a reason or two why a website has been punished. Furthermore, there are many cases where websites have regained their status after cleaning things up.

* Quality of earnings. Private advertising is considered the lowest quality of earnings because there is a risk if you do too much, even if it’s with a client you know or is a product you use, you may get hurt by Google. Private advertising also takes a lot of maintenance and negotiating which isn’t great for those who seek to generate passive income. Once in a while is fine, but every other post is a sure fire way to never grow. Meanwhile, affiliate advertising and your own products are the best form of advertising because they are generally always products you endorse, and they are also links where Google specifically says they are fine. The higher your dependency on direct advertising, the lower the multiple a buyer is willing to pay. I would put a 90% discount on direct advertising income for example.

* Burnout. Given blogging is a highly involved activity, it’s easy to see bloggers burnout after several years. If you’re tired of blogging, and someone dangles six figures or seven figures in front of you, even if it is only 1-2X annual revenue, you might just cash in your chips. Just be careful if blogging is your only income source. Once you sell, you have no income, which means you’ll have a tougher time getting a loan to buy a house, car, or anything you like.

* Belief we can just recreate. It’s easy to believe we can replicate the success of our blogs with a new blog given we have experience. If I have to write as much as I have to recreate the same amount of traffic for the next four years in a row, I’d probably give up early because I didn’t start my blog for money. Everything was new and exciting for the first several years as I made new friends and discovered new plug-ins and tricks of the trade. The initial excitement has worn off, and it really bums me out if the main focus of writing is for money. Some of you might indeed achieve similar or greater success. I just haven’t heard of good examples so far. The greater your blog’s success, the harder it is to replicate.

* Different management quality. The large valuation multiple spread between publicly listed companies and blogs probably has a lot to do with the quality of management e.g. you and me vs. CEOs who have spent decades building and running massive organizations. That’s not to say C-level executives don’t cock up things just as bad as the amateur, it’s just that those with money, the buyers of assets have more faith in some fella with a fancy pedigree than the lot of us.


Let’s say you’ve been generating a monthly operating income (revenue minus expenses before taxes) of $5,000 a month for the past two years. You see a 70% chance you’ll generate $10,000 a month in two years and a 30% chance of staying the same or declining.  Someone who buys their way online offers you a tantalizing $100,000 for your site. Should you take it? Surprisingly, most of the people I’ve talked to say YES! Let me know in the comments if you agree or disagree.

In about two years time, the buyer of the website will have made back all of their money if we assume no growth in earnings. After that, it’s just windfall after monthly windfall as the owner hires some staff writers for 20 articles a month for $1,000 dollars if the owner doesn’t want to do anything. Now imagine if the buyer was actually savvy at optimizing a site? The payback period could be even quicker and much more lucrative.

A $60,000 annual operating income stream is equivalent to $3,500,000 based on a 1.7% risk free yield. If we assume a 3% dividend yield on a stock to value the income stream, we are still talking about a $1 million dollar valuation. Yet here we are, salivating over a $100,000 offer! The valuations are so far apart it makes me want to buy every income generating site around who is willing to sell!

Let’s say you take the $100,000. What are you going to do with it? If you invest the $100,000 in the S&P 500 your total return MIGHT be 10% a year or $10,000 if we assume an 8% growth rate and a 2% market dividend yield. There’s also a chance you might lose money don’t forget. If you put the $100,000 in a 7-year CD at 2%, you’ll only get $2,000 a year. That’s pathetic.

If I had a stable $60,000 a year generating blog, there is no way I would sell the site for less than 10X annual operating earnings, or $600,000 with interest rates so low. With $600,000, I would realistically assume a 4% annual return with some risk, for $24,000 a year. The $36,000 discount is my reward for not having to maintain the site. The thing is, I enjoy writing and interacting with the community so working on my site hardly feels like much work at all.

Now of course if a big company decides to pay me say 8X operating earnings but also keep me on as a salaried employee, that’s a different story. You can make a very good living blogging. You just have to stick things through long enough to see the flowers bloom.


It’s important not to be tempted with illusory cash in this low interest rate environment. Cash is trash compared to owning income producing assets like real estate. Do the math and think thrice before selling your website. If you are looking to build wealth, half the battle is holding on for a long enough period of time. Keep writing, keep marketing, keep having fun. When it’s time to sell, remember all the hard work you put into your baby and get what your property is really worth.

It’s been around six years since I started Financial Samurai and Yakezie and I’m actually earning a good passive and active income stream online now. The online income stream has allowed me to pursue other more interesting things, such as consulting for various financial tech startups, traveling around the world, and spending more time with family.

I never thought I’d be able to quit my job in 2012 just three years after starting Financial Samurai. But by starting one financial crisis day in 2009, Financial Samurai actually makes more than my entire passive income total that took 15 years to build. If you enjoy writing, creating, connecting with people online, and enjoying more freedom, see how you can set up a WordPress blog in 15 minutes with Bluehost. You never know where the journey will take you in 2015 and beyond!

Updated on 3/2/2015. Financial Samurai receives about 1 million page views a month now and is making more than I made in finance.  It’s good to hang on! I’m now consulting for Motif Investing and other affiliate clients. It’s the best of both worlds with double income.