Domain names are a staple in today’s technology-centric world. The $16 million sale of “insure.com” to Quinstreet in 2009 may have set the world record, but even longer domain names are routinely sold for hundreds of dollars every day. The result is a unique opportunity for investors to invest in domain names that can be sold at a profit in the future.
Build a strong domain portfolio
Building a portfolio of high-quality domains can take months or years. Often the key is knowing which areas may become popular in the future and cover yourself with the numbers by buying hundreds of domains. Others choose to buy a few already well-known domains and sit on them hoping they appreciate their value.
Words that describe a product or service, including new and emerging products, can be a great investment. But it is very important to avoid any copyright or trademark issues that could lead to domain confiscation.
City or country names, including promising locations, can be great investments over time that can be sold to web developers looking to build community portals or other businesses focused on those communities.
Generic business names, such as dentist or chiropractor, can be great investments when combined with geographic names.
Timely names can be great investments when combined with events taking place that year, such as 2022OlympicPlayers.com.
How to make money with domain names
Buying and selling domain names
There are many ways to buy and sell domain names. Many standard domain registrars, such as GoDaddy.com, will facilitate auctions. Meanwhile, specialized websites, such as Sedo, are designed exclusively to buy and sell domain names. Finally, parking domains with a for sale page are a great way to attract targeted interest from potential buyers.
Fix the price
Setting a specific price is the preferred method for domain sellers who have a large portfolio of domains and are in no rush to sell them.
Auctions are a great way to sell top domain names where there is a lot of interest, as they usually result in the highest possible price.
Make an offer
Make an offer sales are well suited to niche domains that may not have a lot of interest and/or where the exact value of the domain is not well known.
Risks of Investing in Estates
There are many risks that potential domain investors should carefully consider before buying and selling. The three main risks are liquidity, subjectivity and legality, but there are also many others, ranging from misleading valuations to faulty escrow payments. Potential buyers should carefully assess these risks before investing in domain names.
Most stocks and bonds can be bought and sold easily through a broker, but domain names can be much harder to sell. Finding the right buyer often means putting a sell over several months or even years, which means investors need to have a long time horizon and the ability to accept a loss.
Stocks can be valued by the present value of future cash flows, while bonds can be valued by their coupon payments and interest rates. Domains are a much more subjective assessment that can be very difficult to pin down. And so-called domain evaluators are notorious for issuing high ratings which can be difficult to achieve.
Domain names can be a tricky business from a legal standpoint. Choosing names that are too close to a brand name can result in a lawsuit and a court order to confiscate the domain name for free. In other cases, stolen domain names may be sold before the buyer has a chance to discover that they are not the real owner.
Like any investment, domain names carry their own risks. However, for diligent investors who carefully consider the risks and returns, domain names can become an investment that yields high returns and a unique way to diversify one’s investment portfolio.