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Did you know that it is possible to invest in domain names and earn huge returns? In this post, I share tips on investing in domain names as an alternative asset based on my 10+ years of experience in generating significant returns by profitably buying and selling domain names.
Before I get too deep, I want to make sure everyone knows what a domain name is. A domain name is simply a website address, such as FiscallySound.com, and for the purposes of investing, domain names are typically sold exclusive of a website.
If you have ever tried to register a domain name, you likely noticed that the Dot Com version of the name you wanted was not available. The Dot Com is the most desired domain name extension, and this has created a secondary market for domain names, known as the domain aftermarket. In the aftermarket, domain names are sold for 3, 4, 5, 6, 7, and 8 figures, with the most expensive domain name sale logging in at $30,000,000 for Voice.com last year.
Now, before you get too excited, please know that you won’t likely start out closing a 5-8 figure domain sale because you won’t have the experience or resources. You could, however, learn how to find domain names for $20 or less that can be resold for 3-4 figures. In fact, I just did this last week. I purchased an expired domain name for $15 and sold it for $395 a month later. After paying commissions, I was able to net $316. That’s over 2,000% return in a month or an annualized return of 24,000%. If you are thinking, well that’s just one name, you should know that over the past 3 months, I have purchased roughly 5 dozen domains, most of them below $20.
If you are just getting started, I recommend that you learn the business and start small. A great way to start is by picking up expired domains in the $20 range and resell them for $100 – $200 so that you start to see sales because it can take a long time for domains to sell if you are holding out for top dollar. I will share more on this below.
Is This The Same as Cybersquatting?
I want to mention that some may confuse domain investing with cybersquatting, however, they are not the same thing at all. Cybersquatting is unethical and involves registering a domain name for malicious purposes. An example of cybersquatting is when someone registers a domain name that contains a trademarked term with the intent to sell that domain to the trademark holder. Cybersquatting is something to stay far away from and I will discuss this later when I discuss the types of domains you want to purchase and those you want to stay away from.
Domain Investing Basics – Buy Low, Sell High
Some have often equated investing in domain names (also known as online real estate) to traditional real estate investing. There are some similarities such as knowing how to determine value, knowing how to buy low, and knowing how to sell at a profit.
The two biggest differences in domain investing and traditional real estate investing are:
- You can get started with domain investing for far less money than traditional real estate investing.
- A domain name is unique, and while custom homes can be unique, most homes in mainstream America are models that exist in other areas.
Getting Started With Domain Name Investing
There are several things you need to know in order to be successful as a domain name investor. Since this is about buying low and selling high, the primary skills you need to acquire are:
- Knowing where to purchase domain names at the right price
- Learning how to estimate the value of a domain name
- How to analyze a domain name
- How to sell domain names
Where to Purchase Domain Names
The simplest place for a newcomer to domain investing to purchase domain names is via an expired domain auction or listing. There are several websites that feature expired domain names, and one of the most notable is GoDaddy Auctions. Expired domains are domains that were registered at one time, but were not renewed by the former owner. This does not mean that they automatically have value, and in fact, most of them do not. Now, please hear me on this; you need to study the domain market before you get excited and start buying domain names that have no resale value.
Here is a video I created walking you through how I search for expired domain names on GoDaddy.
Two additional websites for finding expired domain names or domain name liquidations are DropCatch.com and NameLiquidate.com. Please know that you should spend lots of time researching and less time purchasing at these sites. I have done this for a long time and I will often spend a half-hour or more searching for a deal and come away with nothing. There are also software tools that can help you in the process of searching these sites.
There are a few people in the domain industry who are kind enough to create daily lists of expired domain names that they see value in. I have used these lists and purchased names from them, so this may give you a head start. Some you can subscribe to, so I recommend doing that, and others you will have to come back and visit daily.
If you happen to know someone who is closing a business or otherwise liquidating their domains, you might be able to pick up those domains at a wholesale price. This requires you to understand the value of the domain name before making an offer. I will share more on determining value a bit later.
I don’t recommend that you make up words and just register random domain names because this will most likely not produce sales. I also don’t recommend buying non dot com domain names, not because they don’t sell, but because I only recommend that someone who fully understands the domain market invest in non dot com domain names. Non dot com domains also typically take longer to sell than dot com domains.
Types of Domain Names
When you are viewing lists of expired domains, you will see several types of domain names. Here are some of the more common domain types:
- Local Domain Names. These are domains that incorporate a region and a business type, such as PhoenixAZDentist.com. I recommend starting out with these since they are easier to resell for a quick return.
- Exact Match Keyword Domains. These are domain names that represent an industry, product, or service, such as ReducingBloodPressure.com.
- Numeric. As the name implies, these are all numbers.
- Brandable Domains. These require lots of skill, so I don’t recommend jumping into this arena. These are made-up names that business owners can use to name a new business if they like them.
- Personal Names. If you can score a firstname.com for a steal, then luck is on your side as those have strong value. Most likely, you will come across fullname.com or lastname.com domains, and I would stay away from those.
What Makes a Domain Name Valuable?
Below are a few pointers on what makes a domain name valuable. These are not hard and fast rules, but as you are learning how to invest in domain names, you want to be as conservative as possible to minimize your losses.
- Length. The best domain names are less than 15 characters and less than 2 words.
- Keywords. If the domain has commonly searched keywords in it, that can be valuable.
Google Ads offers a free Keyword Planner tool that can help you understand how popular a keyword is a search term.
- Popularity. You can use Google Trends to determine the popularity of the industry related to the domain you are seeking to buy.
- Google Search. Do a search on the domain name (with and without the .com) to see what comes up. This will also give you an idea of who may be an interested buyer of the domain name if you purchase it. This is KEY because if you are buying a domain to resell, there has to be a potential buyer. This is why the local domain names are the best to start with. I will also show you how you can sell them without doing any additional work.
- History. You can use The Wayback Machine (at Archive.org) to see if there is a history of how the website was used prior. This will give you an indication of who a future owner might be. As an example, I just purchased a local domain that has a history dating back to 2007. I bought it for under $20 and it is now listed for sale for $2,000.
- Avoid Hyphens and Numbers. Hyphens and numbers make domain names less desirable from a marketing standpoint. Think about how the domain name would sound if someone said it over the radio (this is known as the radio test.)
- Avoid Trademarked Words. NEVER buy a domain name that contains the name of an established business, such as Apple, iPhone, or anything else. You will see them out there, but it is unethical to use a trademarked word or name within your domain name unless you are the trademark holder.
These are some pointers and there is a lot to learn about domain investing. One approach can be to set aside $100 to invest and just step out and see how it goes based on the information above. Keep on reading however as I am going to share insights on how to actually sell your domain names and that is just as critical as purchasing domain names at the right price.
Another option is to invest in the DN (Domain Name) Academy, which is a comprehensive A to Z program teaching you every aspect of domain name investing. It costs $399 for an annual subscription or $799 for a lifetime subscription with updates (this is what I have because the market continually changes). I can’t make any promises, but I would suspect that you should be able to earn enough money to pay for your course simply by taking it. If you enroll using my link, they will actually pay me a referral fee, so if you do, let me know and I will throw in a free 30-minute consultation where I can answer any questions you may have (I am offering this for a limited time.)
How to Sell Domain Names
Domain names can be sold passively or actively. Selling a domain passively involves listing it for sale on one of numerous aftermarket domain marketplaces such as Epik, Flippa, Sedo, Dan, Squadhelp, Brandbucket, Uniregistry, and Afternic. As you are starting out, I recommend buying via GoDaddy Auctions and listing them for sale as GoDaddy Premium Listings and on Afternic.com (which is owned by GoDaddy). Having your domain listed on these two sites will help put it in front of anyone searching for a domain name similar to yours and help with the sale process. I have had MANY domain names sold via GoDaddy and Afternic, just by having them listed there and priced right.
Let’s talk about pricing your domain name. Pricing is an art and science, however, there is no current standard used to value domain names. GoDaddy offers a free domain valuation tool that can give you a ballpark idea on the value of your domain name. Here is one thing to keep in mind about pricing; the higher the price, the longer it will likely take to sell the domain.
As I mentioned earlier, your goal as a newbie in domain investing should be to get some quick wins so you know that you can do it. That being said, if you look at the GoDaddy valuation and price it below that, you will likely get a buyer or an inquiry sooner rather than later. A nice model is to pick up local domains for $20 or less and flip them for between $200 and $400 dollars. Once you start to see some success and you are ok holding our longer to get paid, you can start to raise your prices. I also don’t recommend that anyone take up domain investing as their primary means of income as it is just too unpredictable AND you need to actually put some money up before you can see a return. Please know that in some cases, it can take years to actually sell a domain name, but there is a way to speed up the sale process and that is by actively promoting the domain name.
To actively promote a domain name, you would reach out to local businesses that might want to own that domain name and let them know it is available for sale. Using this model, I know of people who sell low margin domains almost every day and earn a great income. In my example of the PhoenixAZDentist.com domain (which I actually own), I could reach out to local dentists until I find one that wants to buy it. Because I have so many domains, I can’t actively market them all, so I won’t likely be making calls for that one, but I am sure it will sell on it’s own.
What Types of Financial Returns are Possible?
If you can consistently sell domains for $200 to $400 that you acquire for $20 or less, that’s a pretty solid ROI for a side hustle. You can choose to stay at that level, or you can step up your game (as you learn more about the business of domain investing) and spend more money on higher priced domain names that will sell for more money.
I have acquired domains for much more than $20, and they have much more value than $200-$400. At the higher level of domain investing, investors will leverage 4 figures to make 5 figure sales, 5 figures to make 6 figure sales, and 6 figures to make 7 figure sales.
Continuing Your Education in Domain Investing
I hope you have found this enlightening and I do hope that some of you take the challenge and find success with domain investing. Here are a few additional resources I want to share as you embark on learning the business.
NamePros (FREE) – Domain investor forum where you can find years worth of domain investing insights for investors at all levels.
Domain Sherpa (FREE) – Weekly webinar where industry experts share their successes and insights.
Kickstart Commerce (FREE) – Digital marketing podcast that frequently covers domain investing topics.
DN (Domain Name) Academy – The most comprehensive domain investor training on the market. DN Academy covers domain investing from A to Z, and features many testimonials of those who have taken the course and gone on to be highly successful with domain investing. You could invest $400 to acquire 20 domain names and take the long road to learn how to buy and sell domain names, or you can invest $399 for an annual subscription at DN Academy. If you want to go all-in, you can pay $799 for a lifetime subscription which includes updates. I have a lifetime subscription because the industry continues to change and Michael Cyger who runs the site stays on top of it all. As I mentioned above, if you enroll in DN Academy using my link, they will actually pay me a referral fee, so as a thank you, I will provide a free 30-minute consultation as a bonus where I can answer any domain investing questions you may have.
I hope you found this enlightening and perhaps are ready to venture into the exciting world of domain name investing. Feel free to post any questions, comments, and/or success stories in the comments.
Disclaimer: This is provided as information only and not provided as investment advice. Please do your own research before investing and never invest money that you are not prepared to lose.