Legal Disclaimer: I am not a financial advisor and you need to make sure to do your own research before investing your money into any of these projects.
With so many asset classes at or near record highs including the Stock Market, Bitcoin, Gold, even Trading Cards investors who are in search of yield are discovering the benefits of profitable online businesses. These assets are straight forward (but not easy) to operate and are generally selling for 3x earnings (which if they stay stable returns ~33% per year!).
However, people looking to get exposure to this asset class who have not operated a site before have a steep learning curve to commit to. Because of these trends and the significant desire for investors to generate passive returns “operators” have popped up over the last couple of years.
This article is for you if you are considering if a “operator” is right for you.
With our experience in the space we have attempted to provide an unbiased summary of the risks and a list with information for each operator option.
I have put together a beginners guide into the website operators and funds space. This includes a list of the operators and funds that I was able to come across in my research or our existing connections. For each of them, I put together some information we would be reviewing if we were going to choose to work with one of the operators.
I have included some data about each of them, which includes the minimum investment, compensation structure and more. I have also included my thoughts one each of them as someone who is interested in this space, but on a more passive level.
The ultimate goal is to help anyone who is interested in this asset class. Some of the numbers and wording can be intimidating, so this will help break down the space and what you will be getting for your money.
Who Am I?
My name is Ryan Gunn and I work as the seller representative for Motion Invest. I also have a small portfolio of niche websites of my own, so I have experience with building websites from the ground up.
For my websites, I have done all of the work by myself. This includes writing all of the content, doing the SEO work, and more.
What Are Website Operators & How Do They Work?
A website operator will help you find, buy, grow, maintain, and possibly even sell a profitable website. Instead of spending time building up a site on your own, you can simply pay someone to do the work for you.
As a website owner myself, I know how long that it takes to write your own content, do all of the SEO, and all of the other work that comes along with it. Paying one of these operators allows you to skip the grunt work and the years that it can take to get things right.
Some of the operators have management fees, where you pay them yearly or monthly to grow your site. Others have a structure where you split the net profits with them at the end (but more on their individual structures later).
Why Would You Use A Website Operator?
It Saves You Time & Effort
One of the biggest appeals of using a website operator is the amount of time that it can save you. Operators handle the leg work that it takes to find, build, grow, and maintain a profitable site. This typically includes writing the content, acquiring backlinks, finding strong keywords to target, and more.
If you don’t have time to spend several hours per week on your website and you have some capital to deploy, an operator could be a great solution for you to get exposure to this asset class and its potential yield.
The Potential Returns Can Be Big
There are some great potential returns in this space. Let’s say that you buy a site for $20,000 and your operator builds it up to where it is earning $5,000 per month. You could simply hold the asset and keep putting the profit into your bank account each month (minus the operator fee).
Or, if you decide to sell that $5,000 per month site at a 36x multiple, that would be $180,000 (this is sometimes split between you and the operator, depending on which one that you use).
If everything goes well and your operator does a great job at growing your site, there are some serious profits to be had.
Here is a case study where someone achieved these results with a site purchased from Motion Invest.
- Jared Bauman purchased a site from MotionInvest, which was making around $200 a month. After only 7 months, Jared was able to grow it to where it now makes over $1,000 per month. You can read more about his full experience in his interview with Niche Pursuits.
The Downfalls Of Using An Operator
You Are The One Who Is Taking All Of The Risk
There are no guarantees in this space, so if your website completely tanks, it will be you who loses the money and not the operators. Websites can get hit by a bad Google Algorithm update or a simple technical glitch can drop you off the first page of the search rankings.
Most of the operators charge monthly or yearly fees, which means that they are getting their money, regardless of how much your site grows. At the end of the day, you are the one taking most of the risk with your investment.
Operators Are Likely Going To Focus Their Attention On The Sites That Are Making Them The Best Returns
Let’s just say that your site is making $2,000 per month with an operator. Let’s also say that the same operator has another site that makes them $20,000 per month. It is pretty easy to assume which one that they are going to focus most of their attention and resources on.
As smaller-scale investors, we need to be aware that our sites are probably not going to be on top of the priority list.
This is especially prevalent when the operator is compensated significantly on the up-side. They have a significant incentive to focus on the site(s) making them the most and only put in enough effort on the smaller sites to not get fired.
Some Operators Take A Large Percentage Of The Net Profits
In some of the operators’ models (but not all), they get you to split the net profits with them. In some cases, that can be up to 50% of the net profits, along with the monthly or yearly management fees that you are already paying.
Using the same $180,000 example as before, you would only get $90,000 of that profit after you sell (based on the models of some operators). This also doesn’t include any fees that you pay along the way.
In some cases, you are splitting a large percentage of the pie, when you are the one taking all of the risk.
List Of Operators And Funds
Here are some of the top places that offer this service based on my research. For all of them, I have used information that is publicly available on either their website or from signing up to their mailing list.
For each of them, I have provided things like their minimum investment, compensation structure, operations philosophy, and testimonials. I have also provided my own thoughts on each, looking through the lens of a smaller-scale and more passive investor.
|Operator||Business Has Existed Since…||Prominent Name(s)||Minimum Investment/Fee||Compensation Structure|
|OnFolio||2019||Dom Wells||$110,000||Yearly management fee and performance fee (profit sharing).|
|Alpha Investors||2019||Andrej Ilisin||$1,000||Monthly retainer option (upfront fee and a monthly fee) or Profit upside share option (monthly fee and profit sharing)|
|Brand Builders||2015||Jon Gillham & Spencer Haws||$500||Monthly fee|
|Domain Magnate||2004||Michael Bereslavsky||$100,000||Deal fee and profit sharing.|
Onfolio was founded in 2019 by Dom Wells, who is known for his work with HumanProofDesigns.com.
The following data was compiled from their ‘Prospectus’, which I acquired after signing up for their mailing list on their website.
Onfolio’s minimum investment is $100,000 and that can be “spread among multiple sites, or one single authority site”.
They also have a minimum of a $10,000 per year budget that is required to work with them.
Onfolio includes both a management fee and a profit share model. Here is a breakdown of how their model works:
Their Management Fee:
They have a $10,000 per year management fee, which covers them handling the due diligence and migration of a site into your possession. This also covers their administrative costs as you receive a dedicated operator for your site(s).
Their Performance Fee
Along with the management fee, Onfolio also has a performance fee. This means that you give them 20% of the net profits of your site.
If you eventually decide to sell the site, they also receive 50% of what they have added to the net selling price.
Onfolio first takes your investment and finds a good website for you. They do all of the due diligence work and also handle the transfer process to get the site into your possession.
After that, they continue to grow your site, making sure that it is hitting its Key Performance Indicators. They also add new ways to monetize the site and more.
Examples Of How They Make Their Investors Money
Here is a practical example of how they make their investors money. Their example includes a budget of $200,000 and them building it up to 25% growth:
Years of Experience
OnFolio was founded in 2019.
According to their Prospectus, Dom Wells and his team have been involved in content sites since 2012.
Here are some testimonials from their Prospectus:
“Buying a site without knowing how to run it is one of the single biggest reasons people are wary of entering the space. With Onfolio, you can partner up with one of the best operators out there, let them do all the work for you, and still get to participate in the returns that an online business can give you. I’ve known Dom Wells for a long time, and absolutely recommend him and Onfolio.” —Thomas Smale
“When asked who the number 1 operator was that I recommend, I replied Dom Wells and Onfolio.” —Joe Magnotti
Onfolio seems like a fit for investors with a lot of capital at their disposal. The $100,000 minimum is a big number and definitely intimidating for anyone who is looking to get into the space at a passive level.
They seem like a good fit for higher-profile investors, who are willing to invest a lot of money in a project.
Alpha Investors was founded in 2019 by Andrej Ilisin, who got his experience at BrandBuilder.io (mentioned below).
The following data was compiled using their ‘Operators’ section on their website:
Sites typically need to be making more than $1,000 a month to work with them.
Alpha Investors has two different options, depending on how much that your site earns:
- For sites making less than $10,000 per month, they offer a “monthly retainer” structure.
- For sites making more than $10,000 per month, they offer a “Profit upside share” structure.
Here is a breakdown of how each structure works:
Their Monthly Retainer Option:
This is their option for sites that are making under $10,000 a month. They charge you an upfront fee in the first month. There is also a monthly fee that you and them agree on, which you start paying in the second month.
In this structure, you keep all of the equity and earnings. They charge you an upfront fee and then a monthly fee.
Their Profit Upside Share Option:
This option is for investors who want to acquire or grow a mid-to-large content-based website. There is a fixed monthly fee and you also split 50% of the net profits with them.
Alpha Investors starts by doing a technical audit of your site to make sure that things are set up properly. They also do a tune up of your on-page SEO.
Then, they do a link building campaign for your site, specific for your site and business model. They provide a content strategy for your site based on your specific niche. They also add new income streams. At the end, they will help find you a buyer and sell your site.
Examples Of How They Make Their Investors Money
Here are some practical examples of how they make their investors money.
Monthly Retainer Option:
Here is an example from their website on how they make their investors money with their monthly retainer option:
Note – the profitability of this return assumes significant growth, 2x the earnings in 6months should not be expected performance.
Profit Upside Share Option:
Here is an example from their website on how they make their investors money with their monthly profit upside share option:
Years of Experience
Alpha Investors was founded in 2019.
Here are some testimonials from their website:
“I purchased a high-five figures business from Andrej and man, I can say that the experience has been nothing short of amazing. If you’re wondering whether you should trust Andrej and do business with him, I couldn’t recommend him more, and he’s definitely a man with integrity and someone I would definitely work with again” – Colin Ma
“By teaming up with Alpha Investors I’ve become much more powerful because they have the team, resources, and knowledge needed to evaluate, grow, and then exit the business at the right time for a (very) nice paycheck!” – Vadim Fedorovsky
As a passive investor, their monthly retainer option seems to be the better option for me. The price point is lower and you keep all of the equity and profits for the site. The profit upside option seems to be geared towards more advanced investors, with a lot of capital at their disposal.
The one thing that stuck out to me while looking at their site was the following quote about their profit upside model:
“As you can see, it’s in our best interest to grow the site to its max potential because that’s when we make (real) money”
The concern here is that if my smaller site is using their monthly retainer option, are they less motivated to grow it for me because I am not making them the “real” money? I am not sure but that quote caught my attention.
Brandbuilders was founded in 2015 and includes Jon Gillham and Spencer Haws as part owners who are also the founders of MotionInvest. They provide “Done-For-You” affiliate websites and recently made the jump into the operator space.
The following data was compiled using their ‘managed website services’ section on their website:
There is no minimum investment to work with them but you have to buy a package. Their packages start at $500 per month.
Brandbuilders serves more like a property management company but for your website. Instead of splitting the profit or paying yearly management fees, they charge you a monthly price for their services.
Here are the different options from their website and their monthly prices:
- Starter ($500 per month)
- Growth ($1,000 per month)
- Surge ($1,500 per month)
- Big ($2,000 per month)
- Huge ($5,000 per month)
- Colossal ($10,000 per month).
Depending on the package that you pay for, they provide you with a certain amount of content and backlinks per month. They also provide the following services:
Years of Experience
Brandbuilders has been the leader in affiliate starter sites since 2015. They started getting into the operator side of things in 2020.
Here are some testimonials from their website:
“The BrandBuilders team did an awesome job taking care of my order. They took time to understand my order and what I wanted, then they executed well.” – Dave Chesson
“This service is 100% hands-free and allows you to focus on your business…
As my Amazon business started growing, I knew I needed an Authority Website to help grow my brand. Andrew was the first one I thought of, because of his history and track record of building these types of websites. This service is 100% hands free and allows you to focus on your business and not the tedious tasks of ranking and building a website. It’s a set it and forgot it process that allows my brand to grow each and every month. Thanks Brand Builders for creating this awesome service” – Scott Voelker
For a passive investor, this seems like it would be a good fit. You could spend $500 per month and see how it goes for a few months, without needing to risk a ton of capital. If I was just looking to dip my toes into the space, I would feel more comfortable investing $500, rather than several thousand dollars a month.
I appreciate the transparency of this pricing option. Having been in this space operating my own successful sites I know there isn’t any “SEO genius” out there and success looks a lot like consistent hard work. The BrandBuilders transparent pricing reflects this same view. I feel more confident I know what value I am getting for my money.
Michael Bereslavsky is the founder and CEO of Domain Magnate.
The following data was compiled using their ‘buying and management services’ section on their website:
Domain Magnate works with sites that have a minimum budget of $100,000.
Their criteria also includes investors having a “Basic familiarity with the business model and our strategy”.
Their Deal Fee
They charge a 12% deal fee when purchasing a site for you. This number drops down to 8% for sites that are over $350,000.
They also take half of the profits generated by the site from its monthly revenues.
They also take 50% of the profit that is generated after a resale.
Domain Magnate purchases a site for you and handles everything. That includes them negotiating, preparing, and signing the agreement.
They have an SEO and Marketing team that they use to review the site and create a plan for it moving forward. Their team manages and grows the business in order to build it up for resale.
Example Of How They Make You Money
Here is their practical example for how their process works and how they make their investors money:
Years of Experience
According to his personal website, Michael Bereslavsky has been involved in a variety of different internet-based businesses since around 2004.
Here is a testimonial from their website:
“I like Michael’s straightforward approach to the market and growing private network of sellers. I understood the whole process and our acquisitions have gone really smoothly. The Domain Magnate team is growing quickly and my exits have had great returns. I’m happy with how the investments are going.” – Kurt P
Based on their criteria, it seems like they have no interest in taking on smaller and passive investors in the space.
This seems like a good option for serious investors, who already know a lot about this space. As a more passive investor, I would look elsewhere.
My hope is that this guide helped you in the process of deciding which website operator to put your investment into. The goal was to help any passive or beginner investors and provide them with the most data as possible. At the end of the day, you have to decide which option is best for you.
If you are looking to buy a site of your own, make sure to check out the sites that we currently have available at Motion Invest.