December, 2008:

Buying turnkey or existing websites with built in revenue streams is an excellent opportunity to develop a passive income business, but like anything it's important to follow some basic rules of the road.

Before you even begin bidding you should start by finding out the following information from the seller:

1. Traffic. Your first move is to attempt to determine the approximate number of "Unique Visitors" that traffic the site. There are a number of ways to get a gauge of this but there is no one single source for the information. Be sure to ask the seller where website traffic comes from and also what resources they are offering you to verify site statistics.

You can request direct access to Google Analytics if the seller uses it. You might also ask the seller to install a Statcounter from Statcounter.com to verify traffic on a given day. Be aware that some less than scrupulous sellers may not reveal that the site may also house assets such as images, web-scripts or other utilities used by other sites which can inflate a sites' actual traffic numbers. Finally, be sure to verify whether traffic from RSS feeds is included in the overall unique visitor count as this may also inflate traffic numbers.

2. Website Content. Determine whether the content on the site is "unique" i.e not just stolen or scraped from other sites. Visit copyscape.com and check out a few pages to verify the uniqueness of the content. Also find out whether the content needs to be updated on a regular basis.

3. Webhosting. Is the seller offering hosting as part of the sale and if so what is the
duration of the offer? Does the site require a dedicated webserver (much more expensive) or is a basic shared server adequate to meet site demands? What platform (windows or linux) does the site operate on?

4. In-links. Ask the seller if the site is linked to other websites that they own and whether those links will remain intact after the sale.

5. Transfer of Revenue. Determine the sources of site revenue from advertising and understand that you will need to be accepted by those ad networks in order to maintain the revenue stream once you take ownership of the website. For instance if the site makes a lot of money from Google Adsense you will of course need to have an active Google Adsense account to immediately benefit from that income stream.

If you're buying a site that requires warehousing inventory, find out whether the owner uses a service for this and whether you can establish an account with that service. Also if the site accepts credit cards find out what service the seller uses to process credit card transactions and whether you can establish an account with that company.

6. Site History. It's obvious that a well established site with a consistent revenue stream is a better overall investment. Use resources like Archive.org and check Googles cache to better gauge the history of the site. Also, do a "Whois" search on the domain to ensure that the domain is owned by the person selling it.

7. Licenses. Determine whether the site's software is one of a kind. If so, can you have the rights transferred over to you? Otherwise be sure to find out if the seller is licensing the software from a third party and whether there are any ongoing fees associated with the license. If it is a licensed software package inquire as to whether there are other sites using the same package. Finally, you may want to include some kind of non-compete language within your agreement just in case the owner intends to re-use the software and create another site that may be in direct competition with you.

8. Mailing lists. Find out if the sale of the site includes one or more email lists, and if so whether they are "double opt-in" addresses. How often are emails sent out and what are the costs and services involved? Try to request samples of previous emails and check the spam blacklists to see if the domain name is included.

9. SEO Optimized. Verfiy the website's Google page ranking and check to see how many backlinks the site has. You can use the free Seo For Firefox plugin to get a quick snapshot of all this information and more.

10. Transfer of Funds. You may want to use Escrow.com to transfer the funds as Pay Pal will not help you dispute a claim for anything but physical goods. If you would like to use Pay Pal then you might propose that the seller mail you a cd with the contents of the website via Fed Ex, UPS or DHL. If your Pay Pal account is funded by a credit card or bank account, and you are not buying with a Pay Pal cash balance, then you may be able to dispute a claim with your bank or credit card company.

You can also request to pay for the sale with a money order or a check mailed through a "tracked service" allowing you to confirm the seller's address and contact information.

11. Agreements. You can request a signed agreement covering everything included in the transaction. This can be faxed or sent to your home or business by tracked mail.

12. Seller History. You can get a quick read on the history of the seller by looking up their positive or negative feedback. Also, do a Google search on the seller's username to see if they come up in any other forums, and if so, see what people are saying about them. You can also request references from the seller that you can preferably contact by phone.

13. Instinct. Trust your gut instinct as you deal with the seller. Has the seller been helpful and communicative? Request the sellers phone number and have a conversation with them.