Domain investing is the practice of buying domain names, then selling those names for more than what you bought them for. Domain investors tend to search for names that align with their investment criteria, buy them, and sell them to other domain investors or people searching for a domain for their website.
This article will delve into what domain investing is and what you need to do to become a domain investor.
It helps having a good inventory of domains names on-hand before you sell them. Many domain investors utilize a number of different sources in order to build an inventory of viable domain names.
Every month, millions of domain names expire because owners don’t pay to renew them. Once those domain names expire, they’re available for anyone to register making expired domain names a great source for domain name inventory.
Most of the time, companies use technology to snag up decent domain names and register them the moment they expire. In order to compete with such a high-demand, domain investors need to utilize those “dropcatching” companies so they can acquire decent domain names.
Although time-consuming, buying domain names directly from the owner is a great opportunity to obtain a domain at a good price.
To directly purchase a domain, you would need to reach out to the owner and ask if they would be willing to sell it. If they are, then you can go ahead and negotiate a price. Because contacting domain owners individually takes a lot of time, most domain investors turn to expired domain auctions to get domains easily and quickly.
However, when you buy domains in expired domain auctions, you’re competing against a bunch of other domain investors that can make buying a good domain name challenging. In the end, putting in the work to buy a great domain name is worth it.
Marketplaces like Sedo and Afternic have millions of domain names listed on their sites, which is why they’re popular platforms for domain investors to search for domains they like and then submit bids and buy the domains they like at a fixed price.
Live domain auctions
A live domain auction is exactly what you’d think it is — placing bids against others in an auction. Similar to expired domain auctions, these events have a lot of domain names up for auctions making it a bit more difficult to find good deals.
The most cost effective way to build domain name inventory is by hand registering them. Hand registration refers to registering a domain name that’s not currently registered. The only thing you’d need to do is go to a domain registrar and register the domain at standard prices.
The challenge with hand registration is that it’s difficult to register domain names that aren’t already registered. Hand registration usually works with promising terms that aren’t popular now, but may become valuable in the future.
Although they’re the cheapest domain inventory available, domain investors run the risk of registering domain names only to realize the names are bad. The best thing a domain investor can do is invest in a mix of all types of registrations.
The different types of domains
It’s in the name. Descriptive domains describe a product or service. For example, you could have a domain like SanAntonioLawyer.com that describes a type of service offered in San Antonio.
Descriptive domain names help sites rank high on Google search results. Short, descriptive domains are popular names that do really well on Google and therefore are the popular domain choice.
Brandable domains stand for something other than the dictionary definitions of the word. Meaning, it markets the brand rather than describing a particular product the company sells.
One word domain names used as a brand are valuable to domain investors, but are difficult to acquire. Two and three-word brand able domains are profitable to domain investors.
Another type of brandable domain is made-up words as well as words with strange spellings. However, these are difficult to sell.
Short domains include names that have just a few numbers or letters in them. Short domain names are one of the most profitable investments because there’s a huge market for domain investors looking to trade them.
Domain investors sell domains up to 10x or more of their original purchase price. This can be because domain names are an inefficient market that helps open up big profit opportunities.
Another reason can be that most domains are not easily converted into cash which means they can be in the hands of investors for a long period of time before they sell them, and because a small percentage of inventory is sold each year, cash flow can be limited.
Domain investors that sell short domains or high-end domains might settle for smaller percentage profits.
There are three main ways to sell domain names. Two of them are considered passive while the other, active.
- List your domains for sale on marketplaces. Marketplaces let you set the price for a domain or let you make an offer.
- Add a for sale message on the domain name’s website. That way, when someone visits the landing page of your domain they can see if it’s for sale.
- Do outbound sales. This is an active sales technique that requires a lot of work. Typically, there’s a lot of research and outreach to companies interested in buying your domain name. This entails a lot of rejection like with most outbound sales.
Most domain investors adopt both passive selling techniques. These techniques account for a good chunk of domain sales.
Outbound sales can also include selling domains to other domain investors. This type of sales is good for quick cash rather than getting high profits. Between domain investors, the market is high for short domain name sales. Brandable and descriptive domain names are difficult to sell to other investors unless they are high quality like one-word,.com domain names.
Becoming a domain investor doesn’t happen overnight
Domain investing takes time. It also requires you to refresh your inventory often in order to make your investment profitable. There’s different ways to sell domains. Some investors opt for increased volume of sales and continually reinvest profits in more domains, while other domain investors choose to wait for high value and profitable domains meaning they’ll sell fewer domains.
Domain investing has big payoffs when you’re able to hit your stride and find an investment practice that works for you. If you’re interested in becoming a domain investor, starting by registering a domain today and then trying to sell it at a higher price for a profit.
You may discover a newfound hobby turned business.