Domain Name Investing 101

By on November 3, 2007

Just like stock market investing, domain name investing can be tricky. There are many questions that you have to ask yourself… Buy only brandable names? Current trend type domains? Only .com’s? Break out into newer extensions? Hold or sell? Suffice it to say there is a lot to consider when building your portfolio of domain names or just buying something unique for yourself, business or personal interests.

Domain Name Investing 101

Many hardcore domain traders have literally 1000’s of domain names in their portfolio. But most traders are casual and own anywhere from 5 to 50 on average. The obvious limitation on domain name trading is the scarcity of names to be had and of course the amount of one’s expendable income at the time we are looking for a hot name. But what are the other factors that come into play when you are looking to beef up your holdings?

Factors to Consider When Looking for Domains to Purchase

Cost

  • Registering quality available domains or expired domains is cost effective which leads to higher re-sell profit.
  • Purchasing domains in the aftermarket requires more research but can pay off. It takes big money to make big money in premium domains.

Marketplace Value

  • Brandability
  • Good extension (com, net, tv, mobi)
  • Easily pronounceable
  • Memorability
  • Meaning
  • Length

Business related

Or some profit making ability inherent to name.

  • Cool sounding i.e. Brandable, eye catching or generic keyword(s).
  • Earn back your investment, aim to sell for at least double what you paid for it.

Thoughts on Aftermarket Domain Sales

Selling domains on the other hand is a lesson in economics. We know that virtually all but the oddest names will increase in value over time. So when to sell, how to sell, and for how much are the questions each domainer has to ask himself/herself. Here are some thoughts:

  1. Decent quality domain names will increase in value over time so, if at all possible, hold on to them.
  2. Exposure of your list of domain names is important, you never know when someone may stumble upon one of your names and be willing to pay top dollar for it. Read my review, “Top 6 Places to Sell Your Domains For Free.”
  3. At the very least get a parking service and setup a customized landing page if you have a fair number of domain names. This will provide a residual income and many times cover the cost of yearly registration. Though be sure to avoid common domain parking mistakes.
  4. Hire someone to create simple logo designs for your top shelf names. A developed domain such as a blog, forum, service or storefront nearly always commands more money.
  5. If you are just getting started in domain name trading, stick to what you know. If sports is your passion, trade in that venue of names before expanding out to other niches so that you get a good handle on how this fast paced business works.
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About Mark Fulton

Mark is the Founder of DotSauce Magazine and a full time web developer, domain investor, SEO and online marketing professional residing in North Carolina, USA. Visit MarkFulton.com for information on freelance website development, SEO and consultation services.