Domaining can be hard. It can be especially hard when you teach yourself. When you have to learn by trial and error, and when you waste money on domains that in hindsight you have no idea what you were thinking about when you bought them at the price you bought them at. Sometimes there are nuggets of valuable information you can pick up from the domain blogs, but that information is few and far between. Unless you are lucky enough to find a mentor that you 100% trust it really is all on you to learn how to be successful.
I purchased my first domain name maybe 9 years ago if memory serves me correct, and it was maybe 6 or 7 years ago that I purchased my first domain name as an investment. I do this part time so my learning curve took much longer than someone who does this full time, but I think finally I am at a place where I am confident that I know what I’m doing. That isn’t to say I still don’t make mistakes but my mistakes have become minimized. It really hit me when I was doing my usual routine of scanning the deleting/expiring lists each day and I found myself not liking 50 domains a day. I’ve become much more selective. It took a while to distinguish between domains that I thought would be a good buy, and domains that are a good buy. I figured I’d share some of my learnings from over the years because it may help someone that is starting out today and I really wish I had someone candidly share lessons they had learned when I was starting up.
1. It is much harder to move .net domains than .com domains, even if the domain is a great keyword. I purchased two high quality .net domains a while back, white.net and interest.net. Both were mid-four figure purchases. After buying them I immediately started searching for end users and contacting them. A mid-four figure buy was a high dollar value for me and I did not want to sit on these domains. I figured these are great keyword domains in a respectable TLD and companies would be fighting over them. Nope. After striking out there I submitted them to auctions and they never hit reserve (my reserve prices were about a 50% markup from my purchase price so nothing astronomical) because I wanted to free up the cash I put into them. They didn’t hit reserve… actually one did but it was from a non-paying bidder. I sat on these domains for a while (years). I was pumped when the news came out that white.com sold for 6 figures and interest.me sold for $80k. Surely those prices validated what I paid and gave my domains solid comps so I reached out to end users again mentioning these comps. Nope, nothing. My goal in domaining is to flip domains. I don’t want to sit on domains for longer than a year. My ideal goal is to buy a domain and flip it within a month but honestly that rarely happens. I was finally able to sell white.net when someone contacted me inquiring about the domain. I sold it for a little over 100% profit. Interest.net I am still sitting on. I’m happy I got my initial investment back so whatever I eventually sell interest.net for will be all profit (looking at them lumped together). But it definitely took too long. I could have used that money on many other domains that came up for sale while I was sitting on them.
2. If you see a trend happening jump in on it right away, because no risk equals no reward. I purchased 2038.com and 2031.com at Namejet maybe 2-3 years ago. I paid somewhere in the mid to high $2,XXX range for each. I had no use for them. I had no plan for them. But the prices of NNNN.com domains was rising. I sold them both through Namejet in the $5,XXX range each about a year ago. Trends are like stocks though, you never know when the bottom or peak will hit and the only way you will time it perfectly is with luck. If I held these domains today I could have gotten more for them. But there’s no point in looking back. I was happy with a 100% profit so the sales were acceptable to me.
3. Sometimes you need to just get back what you put into a domain if you can’t move it and move on. I bought the domain QRP.com through a newsletter years ago for around $4,500. I put a site up because I thought I could monetize it. Swing and a miss. It didn’t pan out and there were better opportunities out there with that cash so after holding the domain for around 2-3 years I sold it at auction and basically broke even on it. I took that money and purchased two domains of which one I was able to flip for a nice profit relatively quickly. Ironically I got contacted from a broker who knew I had owned QRP.com and he told me he got a $15k offer on it. A couple months too late. No looking back.
4. There are some great opportunities out there that have nothing to do with the keyword, and sometimes you just get lucky. There was a software that I downloaded and used and I wanted to see if there was an instruction manual for it so I direct navigated to the .com domain name of the software. It was a landing page that a large company had put up and they were selling the domain for $500. I did some quick research on the software and the company that had made it had disappeared (they were in China), but the software was still pretty popular in this certain niche. I grabbed the domain as I figured a lot of the users would be direct navigating to the site just like I had done. I put up a site to monetize something related in this niche and I immediately started making money. In my first year of owning the domain I pulled in around $25-30k. I still have the site up and it brings in five figures a year. Lesson is to direct navigate to domains once in a while because you may just get lucky.
5. Try doing things on a small scale to test out a concept before you go larger. I had the brilliant idea of buying LastName+Landscaping.com domains (example: something like ReynoldsLandscaping.com). I saw a tons of companies using this pattern as their company name so I figured I’d make out good. I made a few mistakes here. First, I bought around 300 or 400 of these so right away I was a couple grand in the hole. Second, I didn’t do any research into what a landscaper would like to spend on a domain. What I learned after I bought the domains is that landscapers, or at least the ones that I dealt with, are stingy when it comes to buying a domain. I wasn’t asking a lot, between $199-$399 per domain, but it was tough moving the domains. In the end I probably lost about a grand and I didn’t renew them, so I look at it as I paid a grand to learn a lesson. Live and learn.
6. When you are going to bid on a domain in auction set a cap and stick to it. I was one of those frenzied bidders at the end of an auction that just fell in love with a domain and so I kept bidding and bidding and I overpaid for quite a few domains. I’m still sitting on some so I don’t want to mention them here, but I probably have $30k in domains that I overpaid on because I didn’t stick to my cap (I probably overpaid by $8-9k from what I wanted to spend). When you overpay it makes your job of selling the domain that much harder because now your asking price has to go up by at least the amount you overpaid. There’s a lot of names at auction at Namejet and GoDaddy that I watch. Now I set my cap and if my cap was $500 on a name and it passes that than I’m out. I know whoever is paying for the domain is overpaying and they are going to have a heck of a time trying to sell it for an acceptable profit. Having the confidence to set a cap and stick to it comes with experience and it took me quite a while to confidently set a good cap.
7. Understand what you can get out of a domain and how long it may take before you go into a domain. A few years ago I bought SpaceCruises.com at auction. I knew this industry was coming. What I didn’t quite understand was the timing of when it would be commercially viable which is when I’d be able to market the domain. I thought I could sell it in a year or two but going back I should have expected a 5+ year wait. If you’re going to buy a domain for something that will happen in the future make sure you understand how far in the future that product or service will be commercially available because your cash is going to be tied up that long.
8. So I just navigated over to spacecruises.com because I wanted to see what ads were being shown on the landing page and it went to a GoDaddy lander page. Dohhh. Thought I had learned this lesson but guess I need to double check. Make sure when you buy domains you are doing everything you can to get them in front of eyeballs. That means having a for sale landing page on them. That means listing them at Sedo, GoDaddy, Afternic, etc… Wherever buyers may be is where you want your domains to be. All it takes is for one set of eyeballs, the right set of eyeballs, to fall on your domain and you’ll get a sale. And double check the nameservers every now and again.
9. Don’t listen to what other people think when it comes to determining a domain’s value. I remember many years ago I was on a domain forum and someone was selling a domain. I was very green and I was very interested in the domain but back then I wasn’t confident in my ability to understand what the value of the domain was. Someone who was considered a seasoned veteran jumped into the thread and basically said the reseller price of the domain was easily worth twice what the seller was asking. Stupid me used this as justification to buy the domain because surely it was a great deal according to this well known domainer. Yeah, I’m still sitting on the domain. I don’t know if that guy was helping his friend out and pumping the domain, or if his comments were honest and he just had no idea what he was talking about. But watch out. If people say a domain is worth $XX,XXX and it is for sale for low $X,XXX you have to wonder why they aren’t buying it and flipping it themselves if they are truly confident in their valuation. With domains there are lots of shady people, scammers, pumpers, and the like so watch out. I should have known better but (expensive) lesson learned.
10. Yes it is still possible to buy domains and resell them for a profit. You and I both don’t have the top of the line premium domains that some people bought 15-20 years ago, but that doesn’t mean there still isn’t profit to be had. I finally got paid out last week on a domain that I sold for a decent flip, ClosetSpace.com. I bought this domain at a GreatDomains auction less than a year ago for around $2,800 and I sold it two months ago for $7,000. It was a domain in an open public auction and only one other person saw value in it as he and I were the only two bidders from around $900 on up to the closing price. There are opportunities out there to make money in domaining. Be realistic and be selective to find the right opportunities.
One problem that most people have is they compare themselves to other people, and when they do this comparison they inevitably compare themselves to someone that is in a better place than they are and thus they get discouraged. If you read about how a big name domainer bought a domain for a couple hundred bucks and he sold it for six figures you should not have that expectation for yourself or compare your sales to that. Those guys have a hundred thousand domain names. They ask five and six figures for basically every one of them. It is a numbers game. Don’t read the sales reports and get cockeyed. Think about it like this, you go fishing and you have one line cast into the lake. Another guy there has 1,000 lines cast into the lake. Who have the greater chance of catching that big fish? If you catch an average size fish you should be pretty damn happy because you were competing against 1,000 other lines. Do you want to throw your fish back and go for the big fish but you risk having no fish at all in the end? That is a question you have to ask yourself.
Before you do anything come up with a comprehensive plan. Literally sit down and think about buying and selling domains before you actually start. You wouldn’t buy land to build a restaurant on until you understand about 100 different variables and domaining is no different. Do you want to flip domains quickly or are willing to wait years for the right buyer to possibly come? How much can you afford to invest in domains and what kind of return do you want on your investment? Are you going to focus on a niche, and if so, which one? What are the historical domain sales in the niche you’re looking at buying into? How are you going to sell your domains? What will you do if you can’t find a buyer for a domain? Can you afford to sit on a domain if you can’t find a buyer? Are you willing to accept a loss on a domain and if so how much is an acceptable loss? What is your sales pitch for the domain… do you have solid facts, historical sales, a business use, or whatever else that you can present to a potential buyer? How many potential end users are out there for the domain you are looking at buying? Etc… And of course all this stuff can change over time, but you should try to set a plan and stick to it initially. Adapt as needed but really having a strict focus is a good thing until your comfortable, confident, and have a decent bankroll to start expanding and shaking things up. You can’t just pick up a bat and start hitting home runs. It takes time, practice, patience, knowledge, experience, sometimes luck, and many other things.