Domain investing is one of the most competitive areas in the realm of online business. Nowhere else are so many people fighting for the same, very limited set of resources. Short, memorable names are in great demand, and are receiving higher and higher offers as time goes on. This is great for a small set …

Is There Cash In Domain Names?

Domain investing is one of the most competitive areas in the realm of online business. Nowhere else are so many people fighting for the same, very limited set of resources. Short, memorable names are in great demand, and are receiving higher and higher offers as time goes on. This is great for a small set of uber-investors that had the foresight to snap these names up years ago, and hold on to them. But how is the newbie domain investor supposed to get started?

Go to where the action is

Everyone knows, the best domain names were registered years ago. But, if you know where to look, it’s still possible to buy great premium domain names.

Some of the best domain names these days, can either be found on secondary markets like SEDO, or BuyDomains.com, each of which list millions of premium domain names.  Shopping on these sites is a bit like shopping on Amazon.com. You can search for some keywords you’re interested in, and will get back a list of possible matches. Some of these names are available to buy at a fixed price, and others are sold through an offer counter offer based system.

Also, there is opportunity in expiring domain names. Tens of thousands of domain names expire daily at different domain name registrars. Names that are not renewed within 30 days are sold off through auctions as Prerelease names at either SnapNames or NameJet. It’s possible to buy one and two word domain names through this system at very reasonable prices.

Names that weren’t snatched up through the PreRelease system eventually will be dropped.  The best of these names are competed for by rabid domain name drop catchers.  Every day at 2pm EST, they set loose their powerful domain name registration scripts that try to register their desired names several times each second. If you’re feeling lucky, and a little bit crazy, you can join them, and try to win names as a drop catcher.

Even if you don’t get the names you wanted in the drop, it’s still worth tracking the names that weren’t immediately re-registered by drop catchers. Because many of these names were registered years ago, dropped domains are often of higher quality than the average domain name you can register today.

Don’t be afraid of doing the research

Many competitive investors evaluate thousands of domain names every day using Estibot or other free domain name appraisal tools. Using tools like these is the only way for a regular domain investor to plow through the large lists of names in play every single day.

Pick a strategy and stick with it

There are several different domain investment strategies for generating cash. Currently, the main two are domain name flipping, and minisite development.

When a domain name flipper buys a domain name, they do so, already having a buyer in mind. One of the best strategies for flippers is to snap up the .COM name of a domain that is already developed and active on a different extension. For example, the name austinexterminator.net might point to a popular local service in Austin Texas, as evidenced by an Alexa ranking, page rank, and a domain name registration date of 3 years ago.  Most likely, they picked the .NET extension because the .COM was not available at the time of setting up their website. That business owner might be very happy to pay a premium price for the .COM extension, since it would prevent any of his competitors from using that name to operate their business.

On the other hand, minisite developers buy names to develop into information websites or mini ecommerce stores. They take the time to develop good content for their websites, and hope to earn advertising revenues over time, as a result of viewers enjoying the useful content they create.

Either strategy can be successful, but it’s important to pick a strategy and stick with it. If you are a person who likes to do sales, and doesn’t mind calling up a potential buyer, you could do well as a domain name flipper. On the other hand, if you like the strategy of building a network of sites, creating good content, and doing SEO, you might enjoy developing minisites more.

Avoid Trademark Names

One of the hardest things for new domain investors to do, is to stay away from trademark containing domain names. In fact, it’s very common to see a trademark containing name on the active list of Flippa auctions on most days. The reason is that, brands are big online.

Every day there are lots of people searching for ‘iphone repair’. If you own the domain name iphonerepair.com, you could probably receive a lot of type in traffic, from people looking for this service. The problem is that one day, if Apple decides that they want the name and files a UDRP, there won’t be much you can do.

Take a hard look at your inventory of names

Many failed domainers, have died a slow death at the hands of registration fees. They made some big sales during the years, but held on too long to a bloated portfolio full of junk names. Junk names that brought in no type in traffic, and no sales offers.

Every time a name comes up for renewal, take a hard look at it.  If it was parked, how many unique visitors did it have over the year? Were there any sales offers? If it was used to host a minisite, how much ad revenue did it bring in?

Also, take a minute to think about who are potential buyers? Is this really a name that would be desireable to the right buyer? Has anyone registered the .NET or .ORG yet? If not, it really might not be as valuable as you initially thought it was.

Domain name investing is still viewed as a black art by most of those outside of the industry. The more you understand the competitive landscape, the better chance you have to create a cash generating business through the purchase of high quality domain names.

Generic Domain Finder provides a set of free tools to help domain name investors find the best domain names for their portfolio.

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3 comments

  1. Good post. If you are sharp and stay on your toes, you can snap up many new domains that become available. Trademark Names are definitely a sticky point but worth it for as long as you can use them. In the same vein, buying a domain name related to a movie to be released down the road is something many do, hoping it pays off.

    -Jean
    tires’s latest blog post is Things to remember before buying Used TiresMy Profile

    • In the UK a Sunday newspaper (News of the World) shut down and several months later the publisher announced it was starting a new Sunday newspaper, my friend guessed the name and brought the big domain for it and forced the publisher to buy the .com one off him for a nice profit. 😛

  2. Of course there will be, nobody will buy a domain name if there was no internet. 😛