This is a game of profit, not a game of totals. I don’t care how many domains I own. I only care how much my assets are worth and how much I can sell them for. I am like a banker. The value of something is the value TODAY. We all hope that it will go up in the future but things can change very quickly on the Internet. When I buy something, my goal is simple. I try and pay less than what I can sell it for today. The future is a bonus. Keeping this approach has kept me profitable.
When you look at half my portfolio you would think I don’t practice what I preach. There is reasoning behind it. One, most are plant or plant related names. Those are a different part of my business model left for another article. I have been continuously buying these names because they offer more value to me than others. I sell a lot of phormium and when I got the chance to buy the dot com for $10 I jumped on it. It looks like a worthless name to you but to me it’s very valuable. The very few exceptions are a few dot infos. For buildout these work for me because I am providing information. Google seems to rank them as well as any other tld so after looking at the owner of the other tlds, often I’ll buy them. At $7, I can make the site profitable in a week. Again, my goal is to make money and the info purchases work here. If I had to flip them, it wouldn’t work.
Again, I stick to names I can sell. That for the most part is dot com. I do dabble in very short dot net and dot orgs. For instance I was just beat out on 43.net today at $8700. I think this was a fair price and could be sold for $10-$15K tomorrow. Will it be worth more in the future? Probably. But I only have so much cash and I can’t afford to keep it tied up in a name for years. Most of you guys out there can’t either. But yet you have hundreds of worthless names that have no chance of selling. Tying up money that you could be using to buy and sell higher quality names. (most people think their junk IS quality but that’s for another article)
I see it every day. I just don’t understand the reasoning behind most of the portfolios I receive that are for sale. Most of the names are pure gambling. Hoping and praying that someone will bail them out. If they would have taken those 300 domains they paid $10 dollars for and picked out one name or two they probably would have been better off. Those 300 become a $2400(at least) liability each year which again could have been put in to a better name. “But that’s no fun”. Having only a few names. “That’s putting all my eggs into one basket”. My business model is getting rid of all those shitty eggs and trying to get better eggs that hatch quicker. If I want to gamble I’ll go to Vegas and bet on black. At least there its 48% chance.
This isn’t to say that there isn’t money in dot net and dot org. There is. All I am saying is that it is much harder to do. It is harder to sell something when it is known by all that there is something better, the dot com. When you sell the dot com the buyer can’t get a better tld. Less words, better words for their business, but not a better tld. I generally only buy non dot coms when the keywords I buy would cost more than $100,000 in the dot com. It’s a very simple formula and it has served me well.
So let’s summarize
1. Buy dot com
2. Quality over quantity
3. Pay price of current or less than current worth. Future is not a given
4. If you are going to buy other tlds buy keywords that would cost hundreds of thousands in the dot com
Footnote: I don’t buy and sell country codes so none of this applies. You’ll have to look to somebody else for information there. Also, this is how I do it. It doesn’t make it right or wrong. There are plenty of other ways to make money in domain investing
Nother solid post. Keep em coming Shane. The best quality posts are posts like these imo. The posts that aren’t reporting news or re-posting news in an attempt to break it sooner or over self promoting. These are raw facts of what works for someone, take em or leave em. These are facts a rookie or experienced domainer can throw into their investment strategy and emulate. Definitely my personal favorite kinda post.
You only find these on few domainers blogs. This blog is moving up there with the greats. The humor, quality info and names and “real life”, personal touch that goes into this blog makes it an awesome read and keeps me as a reader. Keep going
My biggest challenge is “knowing” the value of a domain.
Any suggestions on that?
A domain is worth what someone is willing to pay you. That aside, a good way to gauge a general value on domains is by using Google’s Keyword Tool to identify how many exact searches are performed monthly on the exact words of the domain in question. Combining those totals with the CPC figures will give you a very general idea of what’s possible. The best domain extensions are as follows: 1) .com 2a) .org, 2b) .net. The value of each extension is largely dictated by the category of a domain. For example, .com is always king but .org makes for an excellent GEO domain. Notice how many Chambers of Commerce or high ranking city departments possess the .org extensions of their respective city while the .com is being utilized by an affiliate marketer.
kroc,
Thanks for your opinion. If only it were that simple. A name like 5gh.com sells for $500 plus today and has Keyword value of $0. All products in the world are worth what someone is willing to pay. Regardless of input cost. You just have to figure out what the perceived value is and that’s so much more than what you listed
Shane,
Yes, the complexity of domain appraising is much broader than the points I highlighted above. These are just two factors often overlooked. In addition, the age of a domain and how many corresponding registered extensions of the phrase are another key indicator of potential domain profitability. These are just simple “numbers” that you can confirm at home on your computer without any guesswork. There are few certainties in domaining, but search stats and costs per click don’t lie (I don’t think). If a domain has been previously dropped, its whois data might not tell the whole story (the domain’s real age), but my point is this, get good at verifying the slim amount of verifiable data. Once you’ve got that art mastered, improve on the hardest aspect of assessing value, which is determining a purpose for the domain that benefits its end-user enough to not only seek your domain out, but put their money where their mouth is. Although it’s only one factor in your quest, it’s often the one that makes you or breaks you. Good luck, folks!
Where is the part 3?
There is no part 3 as far as I know, it seems to be a mistake, but this post is very useful, thank you Shane.
@Chad
You learn with experience.
Hi Shane. You say that: “I generally only buy non dot coms when the keywords I buy would cost more than $100,000 in the dot com” Can you clarify what this means? Many thanks. Paul.