5 Requirements You Need To Profit From Domain Investing

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Let’s go over this again. A domainer (i.e. a domain investor) is someone who buys or registers domain names, and later sells for a profit. While profiting from domain investing is not a sure deal, this is the primary objective of a domain investor. As with everything else, the industry has had a lot of ups and downs and 2011 appears to be promising. Profits can be made, provided you meet certain minimal conditions. These are:

Capital: Unless you are a “big gun”, not a lot, depending on how many domain names you are willing to buy and how much you are willing to pay for. You can register domain names for as little as $3 or buy “existing” domain names for a good sum of money. I would stay away from buying existing domain names (except expired domains), unless you really know what you are doing.

Hint: A small tactic that can work well is to leverage on the “grace period” of a newly registered domain name. Normally, registrars will give you a “grace period” of 120 hours or 5 days, to decide whether you want to continue with the name or not. Use this time to list the domain name in popular auction sites and see how they “move” during the first four days. If you do not get any bid, you can decide to cancel the order and register a new one (rinse and repeat).

Note that some registrars will charge you for a cancellation fee. If you do not have much initial capital to invest and don’t know how things will perform, this is a good experiment to start. It will give you some experience on how this industry works. Remember, it will cost you, so be careful. Read all the “fine” lines.

Vision: Often times, all it takes is a little “thinking” ahead or having a sharp eye for things. For example, last week, you will see many people making predictions for 2011. Chris Brogan for example made some predictions late last year for trends in 2011. In one of his assumptions, he mentions that “Cloud computing gets real”. This is not just his “theory” but rather a general conception. So, find a combination of “cloud” anything. You might hit a jackpot. Remember to focus first on .com, .net, and .org and if it is really a good one, try .in (very cheap to register $2.99).

Also, recently, .co and .in domain extensions have been made available to the general public and as an example, it is humored that .co could be a good investment for the future. Here, I provide some insights on How To Find And Sell .CO Domain Names For A Profit

Patience: A lot is required as finding good domain names is not an easy task. There are tools to assist you in finding available names. Once found, the other “not so easy” task is to sell it and this is where you should be careful when choosing the right marketplace. I highly recommend Sedo.com and AfterNic.com, although there are others out there. Just do your research and make sure they are at least BBB (Better Business Bureau) certified.

Know where to find them: Not all domain names are available. You know that already. In some cases however, you can get lucky and find “expired” domain names that are being auctioned. These “expired” domain names are normally very cheap and this is where you can find real bargains. I personally use Dynadot and GoDaddy marketplaces. Note that ICANN requires accredited registrars to “hold” expired or deleted names for 30 days, so you won’t be able to sell your domain name (affiliate link) before that period. I will talk more about “expired” domains in a separate post in the near future. For now, I just wanted you to know about this “niche” within a niche opportunity.

Not Greedy: Forget the millions that everyone is talking about, period. The idea is make a profit and fast :). Selling a domain name that cost you say $10 for $100 in days, sounds good to me, at least until you get a hold of things. So set your prices well. If it gets popular in an auction then it might (or not) take off. Just remember to set your goal and stick to it. A great resource site about everything related to domaining, is Domaining.com. Here you will find, among other things, an automated domain appraisal website that can be used as a guide to valuate your domain names.

  • The above are the minimum requirements you need to successfully start your domain investing.

Misconception About Websites and Domain Names

This is probably one thing that many get confused. There is a difference between the value of a website and that of domain names. I heard a person say once that because his website is very popular and has all kinds of good metrics, that his domain name is worth a lot. True?

While this can be true when it comes to “buying” an established website with “keyword” rich domain names, it is not necessarily true for domaining. A website with a domain name of “bestblogtipsintheworld” dot whatever, can be popular and even worth a good deal of money, as a website. The domain name is worth zero. YES, a big fat zero. So remember, when investing on domains, forget websites. If you want to make profits buying and selling websites, then I suggest you read and get familiar with website flipping.

Anyway, while this may somewhat be conflicting, for domain investing, people or companies do not value a domain name because of the website. Every domain name is unique, and the ultimate value of a domain is determined by the final price that a buyer and seller agree upon.

That’s it! These are the minimum requirements you need to jump in the Domaining Industry. If you feel there is something I left behind, please let me know.

DiTesco

DiTesco is a Business and Inbound Marketing Consultant, and founder of iBlogzone.com. iBlogzone's main objective is to help startups and small business owners achieve success in their online ventures. | More About Me and my Digital Marketing Services in SP Brazil.

22 thoughts on “5 Requirements You Need To Profit From Domain Investing”

  • You’ve not discussed the cumulative costs of renewing domain names. If you try to predict a trend and buy lots of associated domains around it you may have a monthly credit card bill that scares the he’ll out of you. It’s very easy to forget just how many you own and I’ve fallen foul of this with my webdesign and online marketing business. I’ve over 60 domains just based on ideas that all need to be renewed at different times and at varying costs.

    Without capital and residual income to pay these bills your longterm strategies will be useless.

    • I totally agree with you James. Without a well and set out strategy, domain investing, just about everything else is pretty much complicated to succeed. The idea here is to “sell” domain names as quickly as possible and not sit on them for a very long time. That is the main reason why we end up accumulating so much names and then, surprise, the bill keeps on increasing. I have just about the same amount of domain names as you do, 30 of which are active websites and the remainder are all for sale. One thing is for sure, come the time to renew them and I have not sold any, it is most likely that I will not be renewing them. I am pretty much convinced that if a domain name being sold for a reasonable amount and does not sell after 12 months is not recommended for renewal. Thanks for you input. It is quite an important issue…

  • Hi DiTesco,

    A little birdie told me that .tv extensions will soon be the next hot commodity. Who knows, but I’ve definitely contemplated buying some. With sites like twit.tv in the spotlight recently, makes me wonder.

    Definitely something to think about. Thanks for sharing. 🙂

    • HI Michele. .tv extensions are indeed in “vogue” but for the purpose of getting rid of it “quickly” may not come in to play. These domain extensions are every specific and unless you can get a 6 – 8 character word (maybe even less like your example), I would think twice about it. .tv are not tailored for long tail words and have virtually no value. Now obviously if you can grab one of those real sweet domains, then I am convinced that for the right price it will go out pretty quickly. If you are thinking of venturing a little bit with this, I would try to register .com, .org first, and specially now with the “dot” word in it, e.g., dotBusiness, dotMarketing, dotJobs and on. “dot” is somewhat replacing “web”, “net”, and others, as they are already saturated. Good luck!

  • Sounds very interesting.
    I thought all possible good domains have been used but recently I saw people buying some really great domain names.

    I guess someone that is in this kind of business would not have a problem selling the domains fast, and not sit on them long, as you say.

    I guess renewing them is definitely not something anyone would want.

    And there is always a possibility that a person that wants your domain name, the one you overprice, goes and registers one that is very similar and just as good. One dash away, I guess.

    • Hi Brankica. You are right about the “one dash away”, but that defeats the purpose of domain investing. Often times people will go that route because their domain name of choice is already taken and in this case may or may not be for sale. If it is for sale, the price tag could be way to “overpriced” like you said and therefore not interesting for investment purposes. Also, in most cases, people who register names with hypens use it for creating websites, which are either for personal use or flipping it at a later stage. The later, flipping websites, is a rather lucrative thing too 🙂

      Now, for a little extra (maximum $100), you can grab “expired” domains. Expired domains are from people whom like me, after a year or so, decided not to renew a domain name. When this happens, the registrar puts it up for auction and not only can you get good domain names (some established with PR and good traffic), you can get hem for a real bargain. I bought recently in an auction of “expired domains” for $30, the domain seoarticle.net. Interesting name and keyword rich. The site has a PR of 2 (not much but good nonetheless) and according to the valuation site I recommended above, it is worth $850. 30 days from now, I will try to “get rid” of this with a 50% discount, lol. Think it would go?

  • Hi Ditesco

    You sure are a wealth of information. I have seen this before but I am not there yet. Would not feel confident enough to get into this but definitely something for the future.

    Thanks for sharing your own experiences. Keeping it real.

    Patricia Perth Australia

    • Online services could mean a big deal in the future if one has the guts to utilize this perpetual process of gaining or regaining domains from expiration. This wealthy information which incorporates a good sum of capital investment, and the visualisation of a good strategy and domain names as well will bring the domainer such success. However, at this process the domainer also should be constrained by not being greedy of profiting extensive cash from a domain -ethics comes in. So, buyers would know also to evaluate domains as well.
      Thanks for sharing this experience DiTesco!

    • Hi Patricia. Yeah, domaining or domain investing is somewhat more specific but I decided to say a little something here for people who are interested in entering the game. As you can see from James comment, this is something that could quickly get out of hand. Like you said, you are not confident enough to get there and in my opinion it is my opinion to stay away from it, unless you want to give it a try… maybe in the future like you said.

  • DiTesco

    Thanks for this article. The idea of the domain investing has always been one that I found quite interesting. You never really know anything more about it then simple concept: by low sell high.

    Thanks for adding a lot of really good information resources. It was very interesting.

    • Hi Steve. You are welcome. Domain investing can be really profitable and at the same time, you can have fun with it. It is great to “hunt” for domain names if you have a sharp eye for thing, this can really “take off”. If you are really interested in domain investing (even if it is just a little), another topic that you might want to look at is website flipping. I actually wrote a two part series about it and just updated it today so they are pretty fresh. If you want, take a look at the page I just wrote today: website flipping

  • Hi DiTesco,

    I know that there are people that make big bucks from domain flipping but I am not all that confident in my ability to find great domains and to sell them for a bigger price.

    And even if I would find great domains I think I wouldn’t know how to price them. I guess first I need to build some experience in selling smaller, less expensive domains.

    Great article DiTesco, but anyone who wants to get into this business better know what they are doing or they might lose all the money they will invest. That is, in my opinion, this is no business for a newbie.

    • Hi Alex. There are people who do make some big bucks on Domain Investing and you are right about one of the most important things in succeeding well and that is establishing the right price. As I said, the tools above are good guides to appraise a domain. On a side note, I do not think that this is not for “newbies”. Everyone has to start somewhere and the only way to get familiar with how things work is by doing it. True it requires some capital, but if you target your portfolio only on “new” domains, then it is not a lot. Just for you to have an idea, recently I purchased 3 domain names (not .com), for $10. Will I sell them for a profit? Maybe, but the risk of loosing is too low so I can play around and learn how the game is played.

  • OK, so what if I have a blog which I’m tired of updating, would it be better for me to try and sell it as a blog or just as the domain itself?

    I have a few listed on Sedo for about a year but haven’t even had a nibble. I’m sure it’s because they’re waiting for me to advertise it through them first but it’s not that urgent for me to sell. It was more of an exercise than anything else.

    Still, I may have to try listing at least one to see if it makes any difference

    • Hi Sire. If you have a website and are tired of updating it, I would not know what to suggest without knowing the domain name in itself. If the domain name has value, then it is better if it has a website adjacent to it. My suggestion would be to sell it either on Flippa or you can even try on eBay.

      This goes for the same domains you have on Sedo. The only problem with Flippa is that you have to pay a listing fee whether your auction is or not successful. SEDO is good for “near to” premium domains and if it is long tailed it probably will never go. Try putting them up on AfterNic. They have much better return for parked domains and since you are going to be a “new” lister, they will attract more attention in the beginning.

      • The two I’m thinking of is photos2blog.com and topsoftwareonline. I reckon if I sell those two off I’ll have more time to concentrate on the others.

        I may have a look at flippa, thanks mate.

  • Hi DiTesco, everything sounds good to me except the fact that domain name investing will work for only few people who have an extra bit of luck. Well I tried to predict the future and I have bought 12 domains in the past one year, but no one is ready to buy them at the price of even $15. So even if you follow all the tips given in here, we need a bit of luck to get successful in domain investing.

    • Hi Sathish. You are right about one thing, all of us do need a bit of “luck” in almost everything we do. My understanding though is that unless we do something, even “luck” won’t help. It is true that Domain Investing is not easy, just like anything else and perhaps sometimes, all you need is a little bit more of effort. First you need to find the right marketplace. An example could be adult domains, which won’t sell well in one marketplace but may sell well in another. The other issue and an important one is how do you list your domains? I mean just like selling a product or service, you also have to give that “call to action” and fire that “wow factor” for a potential buyer. I see many domains that could be good but combined with price they are asking coupled with a bad marketing, they literally are “killing” its potential.

      As for the domains you are trying to sell, send them over to me and I will look at them. Something might interest me 🙂 Seriously, send them over

  • I suspect that like many others, I have collected a basket full of domains that at one time I had the intention of building into a website yet they sit idle. There are a few in my collection that I feel are good names, but I haven’t ever really considered trying to sell them – or maybe I should say the thought has crossed my mind but I have never pursued it any further.

    I’ll have to check out the resource you listed for valuing a domain name to see if I have anything that might recoup some of the money I’ve spent. Thanks for the article DiTesco.

    • You are Welcome Derek and thanks for taking the time to drop by. Like you, I had the same thoughts initially when I collected a lot of domain names, and intended to create sites (even mini) just to take advantage of having “exact keyword” matches on my URLs. As time went by, they did not really pay off so I started to get rid of them and recovered some cost of those bad investments. If you are interested in selling some, let me know.

  • I have purchased some domains not for the selling purposes but I though they are the good domain names so I will keep them to make some interesting blogs on some of them I made blogs and do some posts in them and also little SEO as a result these domains have averagely about 2 to 300 visits per month, one day I accidentally saw a domain price checker and check the prices of domain I was shocked by the results the checker give the prices about 1000 to 15000 dollars but whois says that each domain worth is only 75 to hundred dollars, so I want to know who is actually right

  • There’s more to registering domains than most people realize. To be fair, it’s not difficult by any means, but if you don’t cover all your bases at the beginning it could come back to haunt you much later.

    That’s why it’s helpful to maintain a few things in mind before you get started and as you are going through the method.

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