Section VI: Domain Names As Investments | Part 1: Creating A Portfolio
Domain Names As Investments
There are people who buy and sell domain names, and then there are domain name entrepreneurs. What’s the difference? Simply put, domain name entrepreneurs are willing to invest both time and money into the domain name world. Think of domain names like stock. Sure, you can keep an eye on the market and buy or sell some stock here and there, but if you want to truly make the money, you need to invest at every turn and be totally up to speed with what is happening in the market right now. Domain name investing requires that same attention.
That’s not to say that you should quite your job today in order to become a domain name entrepreneur. If you do that, you better hope you get really good at it really quickly! Domain name buying and selling takes time, and you need to spend a few weeks at least eyeing up the market, watching trends, and learning your way around the domain name world. Its not an overnight process, nor is it a get-rich-quick scheme.
Creating a Portfolio
Just like when buying and selling stock, you should build a strong, diverse portfolio when buying and selling domain names. In some cases, these will be names that you will keep for a long time; in other cases, you’ll sell quickly. Look at your portfolio as your record keeper as well. As you buy and sell domain names, keep track of how much particular names cost and the profit they brought you in the end. This will help you gauge the market and learn what works best for you. Every buyer and seller is different.
You may notice that I keep calling you a domain name entrepreneur, not a domain name speculator. There’s a big difference here. Many people who get into the domain name buying and selling business are speculators and don’t realize that by taking their business to the next level and becoming a domain name entrepreneur, they can make much more profit. It all has to do with how you treat your portfolio.
Basically, you can think of speculators as people running yard sales and entrepreneurs as people running antique stores. You can by, for instance, an antique chair at either place. In fact, you may find the very same chair at both the yard sale and the antique store. At the yard sale, the chair’s probably a bit dusty, and maybe has a broken leg or a tear in the cushion. At the antique store, the owner took a little time to fix that broken leg and have the chair newly upholstered. Which chair do you want to buy?
It’s true that some people still will go for the chair at the yard sale, because it will probably be cheaper. However, the antique store will always have buyers interested in items, even if they are a little pricey. It has nothing to do with how well you play the market—becoming a domain name entrepreneur instead of a speculator simply means that you are willing to go the extra mile to develop your domain name on some level. Your portfolio will reflect that. You have to start with good names, but caring for these names will make you more successful when selling them
• A Strong Base
Begin by compiling a fairly strong list of domain names that you own. If you can find generic names for an inexpensive price, that’s a great way to get started! However, since most generic names are not for sale or are too expensive to warrant purchase, start with domain names that are hot on the market right now. Yes, this requires some research.
However, if you’re simply at a loss as to where to start, try looking over the rules from part one. If the domain name is memorable and creates a strong image in your mind, it is probably a legitimate buy. Notice that I say probably. Nothing is a sure thing when buying or selling domain names—that’s the gamble! As a review, here are some examples for you to review the guidelines a bit:
Green light (rev your engine and buy these names!)
- Cars.com: It’s generic and has a .com TDL, like the rest on this list.
- UsedComputers.com: The site’s name tells you exactly what the site is about.
- FinancialMarketingPros.com: Although long, it is a subject (financing) that is in high demand on the market.
- Amazon.com: It has a track record of success.
- Cancer.com: The topic is popularly searched.
Yellow light (proceed with caution, but consider them)
- Cars.net: TDLs like .net and .org are beginning to rise in popularity
- Used-computers.com: Hyphens are ok if the subject matter is strong
- FourSisters.com: Be careful of domain names with numbers, since people may get the spelled-out version confused with the number version. Buy if the name is strong.
- Any xn-- site: This indicates an IDN, so make sure you understand what you are buying and that you’ll be able to market and resell it.
- Hottels.com: If a name is misspelled, it may or many not make a profit for you. Remember to be careful that you don’t step on anyone’s toes and land a lawsuit (Dsiney.com is not a good idea!).
Red light (you better have a good reason for buying these)
- RTGBPL.com: No one will remember this acronym or what it stands for.
- Microsoft.com: If you’re dealing with a trademark name, you’ll get yourself into messy lawsuits for cyber-squatting.
- IlovetoSipBlackCofeeEveryDay.com: This is way to long to remember.
- Cars.tv: Most TDLS other than .com are not worth the money.
- PhriedPhoods.com: Weird spellings are a no-no in most cases, unless you plan to brand the name like crazy.
If you want to be a domain name entrepreneur, a good rule of thumb is to never buy a name that you can’t use yourself. If you don’t want it, no one else will either in most cases! Plus, it sometimes takes a long time to resell a name. While you’re waiting for the resell, why not put that domain name to some good use? Later in the chapter, I’ll discuss how to develop your domain name, but for now, just focus on buying names that have some value.
Remember, like when buying stock, find names that work on many different levels. If you find a market trend that’s hot right now, purchase a few domain names, but also remember to diversify your portfolio. In other words, look for generics, IDNs, .nets and .coms, hyphenated names, misspellings, and many other domain names that have worth to different people.
