919 – Digital Investing Trends with Matt and Liz Raad

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In the podcast:

We should pay attention to the kind of people we get advice from. What makes Matt and Liz Raad so credible? [02:25]

Our guests made the move to online well before the pandemic. What have they observed in the market since? [6:00]

James and the Raads compare family history and where they are today. [09:41]

With big players entering virtual real estate investing, do the small guys still have an angle? [12:30]

Matt and Liz hang out with some pretty high net worth people. What are these friends of theirs buying? [15:40]

One of the Raad’s students bought a website for two grand. Now that site makes $17,000 a month. [18:53]

E-commerce may seem an obvious business model. What many don’t realize is the risk it involves. [20:14]

You can’t just buy and sell websites and expect to make money. It takes some amount of effort. [22:01]

When people think you’re wasting time and energy on the online thing, how do you deal? [24:36]

There’s a change these days in the way people go about building online properties. [25:55]

When you’ve put in the resources to develop a website, that’s time that potential buyers just can’t buy. [29:31]

Owning some kinds of sites can open surprising doors for you. [31:06]

Discover your ideal business model with James’s help

Matt and Liz Raad were last on the show talking about, is your business worth more than you think? Today they’re back for another sort of discussion: digital real estate investing.

Now, James’s grandfather always said one should pay attention to who they’re getting advice from. So what kind of background makes this couple’s opinion worthwhile on their topic?

Why Matt and Liz are worth listening to

One of the big things, says Matt, is that they’ve been full time investors online, in online businesses, for the last decade. For the last 10 years they’ve been buying and selling websites and hanging out with other investors.

What that means is they see lots and lots of deals. In a year, says Matt, he probably does due diligence on over 1000 websites. That sounds extreme, but you have to consider that among other things, they coach people and often help them do due diligence.

Over a decade, Matt and Liz have analyzed thousands of websites, and they see what works, from websites that make 50 bucks a month up to websites that make millions of dollars a month and sell out for $20 million, $50 million.

The couple’s actual background before that is mergers and acquisitions, buying and selling traditional bricks and mortar businesses up to around 20 mil. And through that, they’ve gotten to work with a lot of high net worth, private equity. And they still do that today as well.

That just means, says Liz, that they get a lot of insights, and they come from a bigger picture background.

James can relate. In his own line of business, it’s his years of exposure to numerous deals, numerous ways of making an offer, different ways to keep members, etc., that lets him help people find answers.

That’s what they love about working with him, says Liz. His broad range of experience makes his insights awesome.

They were in James’s SilverCircle, Matt puts in, and it helped them make the transition from bricks and mortar to being fully online. James also encouraged them to take a step back from their business, to work less and spend more time with their kids. For that they’re grateful.

A transition made ahead of the market

Matt and Liz made the switch to online well ahead of the rest of the market. Then came the pandemic, and regular people globally discovered their world.

The couple would have seen a shift, says James, in the way people view websites. Their traditional audience may have started to come online, and the competition may have become more serious. James would love them to speak to that and the sort of changes they’ve seen.

They’ve seen two big things in the last couple of years, says Matt. One of them is that the big buyers are now fully getting into online businesses. They can talk about this because these are the sorts of people they help and advise.

Then, too, there’s the interesting part of the market that’s boomed – everyday people, professionals, especially, want to quit their jobs and work from home.

That’s pretty much who they cater too at eBusiness Institute now, professionals who want to quit their jobs and who have traditionally been real estate investors. It’s a convergence of, do we keep investing in real estate? Plus, now I want to quit my job.

The great resignation, says James. He’s seen stats as high as 70 percent of people who don’t want to go back to work.

One of his surf buddies, Lloyd, worked a job in a bank doing software installations, and hated it. With James’s intervention he started a business, VirtualDOO. It’s absolute validation, says James, that you can go from that corporate to your own online business. And there’s plenty of other people like Lloyd who are yet to discover how.

Family history and the present day

It’s interesting, says Liz, that both she and Matt come from a line of people who were not exactly poor, but just could never rise up. They’re talking hundreds of years ago. Everyone was a manual laborer or the like, though obviously, they had the brains to potentially do more.

Now they’ve come to a point in history where, if you’re willing to step up and actually learn some stuff, you can create whatever it is you want to do in your life. There’s so many opportunities.

Matt and Liz are seeing people change the direction of their lives and creating the life they want by getting online. There’s validation from big corporates and high net worths who are investing large sums of money, and validation as well for the smaller players, who can see it as something they can actually do.

How much of a chance do the little guys stand?

So how do the little guys get an angle, with all the big players coming in, asks James?

It opens up multiple opportunities, says Matt. First, you’ve got to look at why the big guys are coming in. And just the volume of transactions has validated the marketplace. These are real assets. They’re virtual, but they make a lot of money. And they’re passive.

The Raads are buying for the same reasons. And their clients are buying websites or building websites. That’s a big new trend, too. And they’re building those websites for exactly the same reasons the big guys are.

One thing you might want to be thinking about is safety in the marketplace. As full-time investors, they know when buying shares that one of the best ways you can protect yourself from a market correction or a bear market is through diversification. So they don’t want all of their portfolio to be in shares or all to be in website or all to be in crypto.

A lot of people are saying they’re overextended. And look at crypto, the volatility. It’s a great investment, but follows shares. So where’s the safety? What can one do? Plus, people have to realize that inflation is real.

Well, the cost of doing nothing is probably the biggest risk of all, a financial planner told James. To have a large amount of cash just sitting there, gathering meager interest rates, is risky. You’ve got to be exposed to the market. But then, which market, and in that market, which part of it?

What James is hearing is there could probably be some kind of website stuff. James has been selling domains, and noticing a ripple of activity. People are finding value in these domains, and they’re off to develop. And he’s talking a couple of thousand dollar domains, not just hundred-dollar domains. So there’s something there.

What are high net worth people buying?

James is curious: what are the Raads’ high net worth friends buying?

From hanging out with Matt and Liz, these folks are all interested in doing website acquisitions. Matt believes they’re looking at it for diversification.

One step back, says Liz. She thinks one of the major reasons is they need to get a return. If you’ve got a real estate market at its peak, and you’re not getting good returns, you need to put your money somewhere. And the best thing to invest in is something that is high cash flow.

Even better is if you have some control over the returns. That’s why they’re finding such success in the online space, because not only can they invest in a website, and do it completely passively, but they can talk about the funds now springing up where you can just put money in, and someone will run the website and you just get the returns.

That’s definitely increasing, Liz goes on. But if you want to be an active investor, you can generate a lot of very high return and you have control of the levers. That’s something she and Matt like to have. They want to have some investments where they control the levers, and they can do things to increase returns even more.

Speaking his language, says James. OwnTheRacecourse.

What you really want to avoid…

Warren Buffet said, when the tide goes out, we’re going to see who’s standing naked. And you don’t want to be standing naked, says Matt, which means in business you don’t want to have debts.

That’s why he and Liz love websites. They avoid online businesses where you have to own stock. What they’re interested in is FCF, free cash flow, with no debt, where websites become compounding machines.

An example of smart website investment

An example of this: one of the Raads’ students bought a website for $2000. This is what they teach, a content site for two grand. Their student has had the site for three, maybe four years now. When she got it, it was making $200 a month.

They helped her renovate it, and got it up to making two grand a month, which became five grand last year, and just before Christmas, hit $17,000 a month. That’s profit, because she’s just compounding it.

Once you’ve got the system, says Matt, she just keeps compounding. Basically, it’s good content. Every single cent that she used to make off that, she puts back in the content.

This is what excites Matt and Liz. A lot of their friends, and a lot of the big buyers, have unlimited funds to invest in these content sites. Matt thinks, this year and moving forward, content sites will be the new gold rush online.

There’s work, you can’t get around that

It’s appealing, says James, to hear about an offer where you can buy into training and learn how to do this, but you have to come into this knowing that you’ve still got to do some work.

Matt and Liz exert a lot of effort to make sure people do well, because you could spend your money on the wrong websites, and make nothing whatsoever. That’s very possible if you’re not educated, or don’t know what you’re doing, because you’re out there competing with some of these ultra-wealthy people who are buying.

It’s a good point, says Matt. Their best students live by a saying from Arnold Schwarzenegger: Reps, reps, reps. Don’t just rush out there and buy the first website you see.

Get the training, but then also, you’ve got to practice. Coming back to James’s question, can a small player do it? Absolutely. This is where they start out small, practice on small little websites, plus, get their reps in by building websites.

Across the board, their most successful students do the reps, they practice building websites, they show up, they learn how to post content. If you do the reps, you’ve got a skill for life. It doesn’t matter what level you’re at, you’ve got to learn the basic foundations first.

A change in the way people build

James wants to ask about something Liz has mentioned, that’s there’s a bit of a trend now to building. He knows, for the most part, the Raads teach people to just get in there. And they have a rule, too, that they mustn’t spend more than $500 on their first site?

It’s $1,000 now, says Liz.

But is there a change in the way that people are building now?

Definitely, Liz says. And they encourage all their students, while you’re looking to buy, you don’t want to be forcing a deal. You don’t want to be thinking, oh, I’ve got all this money, I really want to put it in the market right now.

So while they’re looking for the deals, what Matt and Liz encourage is build, build, build. It’s an abundant marketplace, Liz says. There is so much breadth to what you can do online. And it changes too, there’s innovations, there’s new things coming forward, new topics.

But what they say is, even if you see a deal that looks amazing, but you decide not to go ahead with it, think about, maybe it’s a niche or topic – is there a different spin you could do on it, and just build it yourself? Because by creating, by building assets, it’s like planting a forest.

Build a few, a portfolio, that’s their strategy. That’s what’s worked for them, having a range of sites, a range of options.

The sweet spot now in the marketplace, says Matt, for the small players, is to build up their sites, even to making somewhere from $1,000 a month, passively, or 5000 or $10,000 a month passively, and sell them to the big buyers.

Whereas before big buyers wouldn’t touch businesses under 20 mil, now they’re snapping up good sites under a million, even, because it’s a land grab. They want the good sites and they want niche sites. If someone’s covering a certain marketplace well on a tiny niche site, they’ll pay mega bucks for it.

That’s why a big part of their strategy now is twofold. It’s not just buying websites, but morphing into, guys, start building up these sites.

You can’t harvest what you haven’t planted, said one of James’s mentors. James himself is building out a site in a passion area of his, and one day some big company might just write out a check for it.

There is no possible way a buyer can short circuit James’s four or five years of building that website, says Matt. Buyers can’t buy the time you’ve put into developing a site.

Matt and Liz are doing great things, says James, and he’s enjoyed collaborating with them over the years. They’re pros at building, developing, buying, renovating, M&Aing, whatever you want to do with online portfolios. If you’d like help with any of the above, look them up at eBusiness Institute.

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