Domain Investing: Here Are The 7 Golden Rules
Why would anyone want to invest in domain names? Because they’re online Real Estate. A domain name is an address, just like 123 Main St., USA and Internet businesses are just like offline businesses – the first rule of thumb is Location, Location, Location. If you’re sitting on a domain name and some big start-up decides they’d like to have it, you can sell it to them at a profit. But before you start building a portfolio of domain names, check out these seven golden rules.
Build Something On Your Property
I’ve known domain investors who’ve had thousands of domain names in their inventory, all just sitting there empty. In the past this was no big deal, but now, with domain names becoming more scarce the World International Property Organization (WIPO) is stepping in. If you’re not actively using that domain name, they might just force you to turn it over.
In July of 2012 Apple decided they wanted ownership of some domains that contained the word “Apple.” Someone else owned these domains and they just had them parked, not really using them for anything. The owner probably purchased the domains as an investment, after all, “apple” is a popular, generic keyword and eventually he’d be able to sell them at a profit.
But the folks at Apple persisted. In their eyes the owner was just squatting on those domain names and apparently their argument was strong enough because the WIPO forced the owner to turn the domains over to Apple.
So the moral of the story is: Build something, anything, on your unused domains. Even if it’s just a minisite or landing page, build something that says you’re using the domain. As a bonus, you’ll generate some traffic which will make that property even more valuable when a buyer comes knocking at your door.
Only Buy From Reputable Registrars
Only buy from registrars who you know are safe, companies who’ve been around for a while and aren’t going to disappear overnight, taking your domain names with them.
Choose Quality Over Quantity
That domain name sale for a buck a name might look like a good deal right now but don’t forget you’re going to have to pay renewal fees every year until you sell it. And those renewal fees will probably be a lot higher next year.
Only Buy Top Level Domains
Stay away from anything other than dot com, dot org and dot net domain names.
Sell To End Users
If another investor wants to buy one of your domains chances are he thinks he can sell it and make a profit. Eliminate the middle man and sell to end users.
Only Buy What You Can Afford
There are buyers out there willing to pay hundreds of thousands of dollars – or more! – for a good domain name and they’re often able to snap them up for pennies because the owner has put himself in a position where he needs to sell. Only buy what you can afford to pay for and hold on to for the long haul and you’ll have more leverage.
Avoid 4 and 5 Letter Domain Names
The valuable three-, four-, and five-letter domain names were snapped up long ago and you’ll never see them hit the market. Any on the market now are just worthless jumbles of letters. Don’t bother wasting your money because you’ll never find a buyer.