Domaining vs Investing

[mh231]

Hello everyone! I'm new here but I've been kicking the domining can down the road for a better part of a month now in terms of research and self education.

I'm an investor. We own storage facilities, businesses, commercial/residential real estate. I have experience in web development and basic programming.

The more I read, the more domaining seems less like investing and more like gambling. The whole hand registering seems like trying to find a needle in a haystack. I keep reading that most new folks to domining will never be able to sell their hand registered domains etc. I understand there's learning curves and in order to learn, generally you have to spend/lose $$$.

Another thing I've noticed is many, many, many folks trying to get into this have no budget and are trying to find the quickest way possible to make money and want to spend as little as possible.

I guess what I'm trying to say...is there a difference in HOW I should move forward with educating myself on domining? I'm not particularly interested in hand registering domains and trying to find one that's worth a few hundred bucks...but I understand that perhaps that's recommended for someone who Is new to this.

In investing we mostly talk about cap rates, interest and ROI. I can generally run figures and produce a rough expected ROI. I'm struggling to find out how to do this with domaining.

Maybe I'm just too new, maybe I need to slow down, maybe I don't even belong here because domaining is not for me. I'm absolutely not looking for another job or a side hustle...I'm looking for a passive/semi passive investment strategy to add to my portfolio. I have a good budget. Our average RE returns are 8-15% but I don't even know how to begin to calculate a projected roi with domains if say I invest $25k.

You other investors, what strategy did you follow when it comes to domaining?

I'm open to criticism, opinions, suggestions, education resources...anything really.

 

[AEProgram]

Everything is a gamble. Your businesses regardless if you started it or purchased it from someone else, was a gamble. Even if you are given a 500 billion dollar business for free it's a gamble. You might walk into the business one day and fall down a shaft and get killed.

In Poker, everyone at the table is gambling even the guy that was dealt A-A. The person next to him that was dealt 2-7 can go all in pre-flop and he could win, but the person with the AA has a better chance.

You could make money from handregging a 25 character .net with a hyphen and a number in the name but it's not likely.

It is possible to start a business with 5 dollars and turn it into a million dollar company, but it's not likely.

It is possible to buy a penny stock and make a lot of money but it's not likely.

Domaining like every industry will cause people that get involved in it to lose their money. Rarely do newbies want to hear the truth about this business and they will get the truth delivered to them one day but they will be a lot poorer.

Even if you follow all the right steps in any business, you can still lose your money, the same in domaining.

If someone has 1000 dollars and they want to invest in domains even knowing the risks, and they want to increase their chances of making money they need to find names that are taken and are for sale.

You could find good names on namepros itself but you will have to look a few times a day for many months to possibly see one good name worth the asking price and usually if it's real good by the time you post to buy it someone already got it.

You could find good names on expiring marketplaces and delete lists. If they have no bidders, it's usually not that good of a name. Most people will say "well, my biggest sale was a closeout auction purchase for 5 dollars". Yes, even degenerate gamblers do get lucky sometimes. You know what happens next? They try to chase that luck and give back all their winnings.

What is a good name? If there was a simple answer we would all be happier.

If someone has money to invest and they don't intend to use the name for their own project, buying a domain is one of the riskiest investments you could make, probably buying terra coin has a better chance of giving you gains, and I do not suggest you buy that.

At the same time, if someone has an idea and they don't invest in the best name they could afford, they are big fools.

For the amount of work needed to possibly make any money domaining, you could do 100's of other things for less money and all will have a higher chance of making you money.

Every industry has a few lucky winners. Most people will lose money on every investment they make it life. Become a master of finding ways to lose the least and you might make a profit one day.

If you are a gambler and know all the risks and don't care. Domaining can be a fun costly hobby but it beats a lot of other hobbies that are more likely to kill you.

Sorry for this depressing post but I recently invested in a pharmaceutical penny stock, they sell anti depressants, I figure the more depressed I can get people, the higher the chance their $0.000000023 stock can go.

 

[mh231]

I have to say, in terms of community this has to be one of the most responsive, understanding and supportive ones I've seen in a while.

I appreciate everyone taking the time to respond to this thread. Know that I have read every response and jotted notes down from each reply.

The responses seem to prove my speculations to be true and overall I need to continue skimming through these threads and picking things up as I go.

I understand investing always holds an inherent risk, and generally speaking....knowledge and experience is the best way to hedge or mitigate that risk. This sounds to be true for domaining as well.

I think I will spend another month studying up and if after that, I'm still interested I'll set up a smaller "burn fund" where I can start playing around and make the mistakes.

Since this would be a long term play for me, I'm in no rush. As another said, "your odds are better investing in anything else" I understand this and it's a very good statement. At this point, what keeps me interested is it will help our port folio diversification, win or lose at least it's money dispersed about instead of in one pile.

I'm a firm believe in diversification even if it means lower yields...because that's usually what it means lol

I just wanted to respond and thank everyone for their insight and time. It's important to me and means a lot. The world still has some good, helpful people after all

 

[Tommys Domains]

Too many people see domain sales and then rush into it without doing any research.

I have done it myself. I have been buying domains for the last year. I think the first 100 domains I bought were absolute trash and I can' t wait for them to be out of my portfolio. Over time I have read hours and hours of threads, books and articles about domains and only now am I starting to learn what makes a good domain and its potential long term.

I don't think you should rush into it and spend a lot of money. Only spend what you can afford.

What I have grown to love about domaining is the joy of finding a new niche, a new name, a golden nugget in expireddomains.net. There are tons of reasons I love it.

I don't take it too seriously. I buy my domains, list them and then forget about them!

 

[VadimK]

Three things to understand:

1. One of the key differences between ''regular'' (whatever it means!) investing and domaining is the level of involvement. In order to understand where to invest you really need to spend hundreds and even thousands of hours getting the game. If you don't have such time - better stay with a more traditional model in the areas where it's relatively easy and fast to understand ROI and risks.

2. This one is kind of a variation of point 1) - but it's more about your personality. A domainer is a person who doesn't mind spending many hours of his life (or a certain period of it) behind the computer. Obviously if you are already into many different projects, things, hobbies, occupations or simply need many different people in your life - you'll get bored pretty fast scrolling through and comparing thousands of names...

3. Obviously there are people here who will tell you: ''don't you worry man, go to DropCatch, buy everything above $500 with certain estimation of GoDaddy and certain tld number taken - and you are good!''. But you know what? You still won't be able to calculate ROI nor to understand when, how, why (and if!) your return will be happening. Stay away from such type of advice. It will decimate your budget fast without any predictable results still.

Hope that helps to make a decision, good luck!

 

[bmugford]

Hello everyone! I'm new here but I've been kicking the domining can down the road for a better part of a month now in terms of research and self education.

I'm an investor. We own storage facilities, businesses, commercial/residential real estate. I have experience in web development and basic programming.

The more I read, the more domaining seems less like investing and more like gambling. The whole hand registering seems like trying to find a needle in a haystack. I keep reading that most new folks to domining will never be able to sell their hand registered domains etc. I understand there's learning curves and in order to learn, generally you have to spend/lose $$$.

Another thing I've noticed is many, many, many folks trying to get into this have no budget and are trying to find the quickest way possible to make money and want to spend as little as possible.

I guess what I'm trying to say...is there a difference in HOW I should move forward with educating myself on domining? I'm not particularly interested in hand registering domains and trying to find one that's worth a few hundred bucks...but I understand that perhaps that's recommended for someone who Is new to this.

In investing we mostly talk about cap rates, interest and ROI. I can generally run figures and produce a rough expected ROI. I'm struggling to find out how to do this with domaining.

Maybe I'm just too new, maybe I need to slow down, maybe I don't even belong here because domaining is not for me. I'm absolutely not looking for another job or a side hustle...I'm looking for a passive/semi passive investment strategy to add to my portfolio. I have a good budget. Our average RE returns are 8-15% but I don't even know how to begin to calculate a projected roi with domains if say I invest $25k.

You other investors, what strategy did you follow when it comes to domaining?

I'm open to criticism, opinions, suggestions, education resources...anything really.

You seem to have a pretty good grasp of it.

There are 170+ million registered .COM. To expect to hand register much of value is relatively unrealistic.
The only exception is really in trending fields, but even then the vast majority of registrations are of low quality.

In my opinion the way to make money is to make quality aftermarket purchases, but to do this you need some starting capital to overcome the low end user sell-through rates.

From my experience the vast majority of people in the field will not make money, and end up moving on.

It takes the right mix of a lot of different skills and traits to build a sustainable business in this field.

Brad

 

[Bob Hawkes]

Thanks for a great introduction to an important topic question @mh231 , and to the many who have offered a variety of valuable views.

I feel that it is investing, but definitely speculative investing at times. That said, it is not at all like investing in say mutual funds, equities, ETFs, etc. One needs to be hands-on, and also there is less certainty that even good purchases will necessarily find a buyer at a profit in the medium term.

While many use real estate as analogy, I think that it does not really fit. The vast majority of properties will sell at the right price, but except for well known dictionary words in .com, with each domain name unique, many domain names will never find a buyer.

I think a better analogy might be investing in early-stage startups. Some will make a great profit, many will fail. One should not invest in startups without knowing the sector/niche, and I would say the same is true in domain names.

There are various starting paths, but starting slow, and only starting at all if you like the field, are willing to put the work in, and have a business plan of some sort.

Very best wishes, and thank you everyone.

Bob

 

[twiki]

It's gambling for the inexperienced, or those dipping a toe.

It's investing for those with years behind it, a neat portfolio and a solid budget. With consistent Y2Y profit % = definitely NOT gambling.

Math is not that great as many expect at first... unless you become a top investor. With $25k total and a good hand /experience, on average assuming low to mid xxxx range sales and the usual 1...2% sales ratio per annum, you might make $10-$15 k profit per year.

You need 6-fig investment in order to make significant money with this. Or mid-5fig but a ton of great experience.

It's far harder to enter in comparison with other fields. Don't underestimate the learning curve. Also this is probably NOT the best time to start, since sales are going down (edit: and will continue to do so.) But rather the time to buy serious names and wait a few years, which presumes you have the experience already, otherwise chances are you'll buy overpriced or bad domains.

Note: I netted $14K in loss in my first year in this, and also a small loss in the second year.

 

[HotKey]

Well, I don't like to gamble. Gambling is like flipping a coin. I also don't like flipping domains, lol. Guess we all have our, as Twiki puts it, angle.

Investing to me implies there is a strategic planning behind the purchases, or a sort of educated speculation at the very least. Taking this into domains, one does not just haphazardly buy a bunch of domains be it hand-registrations or through the aftermarket and call it domaining- unless I guess, that is your angle? I just don't think you'll get very far.

Once you develop a methodology towards investing in domains, or learn how to play the odds if you're more a "gambler", then I think you've become a domain investor.

My strategy is a long-term outlook on qualified names combined with early maneuvering into a certain namespace. It's worked well for me. I didn't back down from domain areas which others seemed nervous to get into because it wasn't in vogue at the time. Being said, while I don't shy away from foraying into the unknown, it's also prudent to have a safety net.

My safety net, or hedging, is on domain names that have had proven results. Dot-com, maybe another traditional extension or two, have had the trail blazed long before I came along and those trails have become highways. Meaning, everyone uses them. So I don't overlook that.

Be aware the domain investing roads are congested now, making maneuverability just a nightmare at times. Your 25k is an healthy initial budget, probably more than what many come into this with. Knowing your strengths and proper research is key to good decision-making into the names you want. So apply some your previous experience in web development, real estate, etc and use it as an on-ramp for naming potentials. Were domain names part of the success of those ventures? If not, should they have been to make them even more successful?

A projected ROI is impossible to give at this point, because you have no history, and every investor is different. Be wise, spend slow. There are many success and failure threads here on NP, and I mean many, take the time to read through them to help you anticipate in what might come.

 

[mh231]

Hi

i've prolly read thousands of posts from newbies over the years and maybe a handful have ever made that quote above.

taking reference points, shows initiative, which increases potential.

imo...

My time is valuable to me, as is yours to you.
I solicited responses which took your time. It's only respectful that I take each reply serious, as I do my business

 

[bmugford]

If it was an investment, there would be more openness about buying strategies, the MANY criteria of a good buy, not just the obvious (people seem willing to share to a point)

There are endless business models. There are many types of domains.
People bring different budgets, skills, and risk tolerance to the table.

It is not a field with some easy path to follow. You largely have to make your own way.

If it was an investment the resale price would not be so subjective.
If it were an investment, there would be a better ROI than maybe 1% of the portfolio will be sold.

To me an investment is something you can acquire with a reasonable chance of selling for a profit in the future.

The domain market is less mature than other markets and involves one of a kind assets.
It is because of that market that the opportunities for massive returns exist.

The stock market for instance has high liquidity. Every share is the same as another.
They are completely different markets, though both are still investments.

Brad

 

[jhm]

Domaining compared to a lot of other businesses is much more on the speculative end. Often hard pinning any kind of numbers / definitive ROI...to a good extent its a waiting game

The beginners section at NamePros is helpful...scroll and read. With a $25k budget, what I will say is that gives you a good leg up to buy quality, when you do so. IMO

 

[poweredbyme]

You other investors, what strategy did you follow when it comes to domaining?

I'm open to criticism, opinions, suggestions, education resources...anything really.

Find a price level which works best for you and stick to it.

It doesn't matter what you sell. It could be domain names, cars, real estates or anything. In every group of things that are sold in any market, there are 3 major price levels: low, medium and high priced goods. Pick a price level that works best for you and operate only or mostly within that price range.

If 4x domains work best for you, don't look at x,xx,xxx or 5x,6x domains, stick to selling only or mostly the domains within $1,000 - $9,999 range. From my experince that's the key in trading in any industry.

 

[biggie]

Know that I have read every response and jotted notes down from each reply.

Hi

i've prolly read thousands of posts from newbies over the years and maybe a handful have ever made that quote above.

taking reference points, shows initiative, which increases potential.

imo...

 

[poweredbyme]

@HotKey ^ An investor should find his/her price level to master it. Mastering/learning process on something is not comfortable. The most confusing part for most people is that after being a true expert in a field doesn't mean creating a better comfort zone, enjoying it and not moving from out of it at all costs. If the motivation is to have a better comfort zone it will eventually end up with sadness. If the motivation is to keep improving comfort zone, it will fail as well. The motivation should be staying out of comfort zone of any quality at all times. The motivation should be to enjoy the learning process.

Every price level has different groups of buyers. A true expert in a market knows how to operate in all price levels but chooses the best one and moves from one to another when required. Therefore in the very beginning of the learning journey he/she operated in all price levels, one by one, not combined. If a beginner operates in all price levels at the same time, will learn very slowly. In school education, students are not given first, second, third, lass class lectures mixed in the first semester. The same principle applies to any learning process, not only in schools.

 

[biggie]

Hi

try to buy an income stream, like some type-in traffic domains that are currently earning revenue.
or as Brad mentioned, bid in the aftermarket.

but with either, you'll have to know the good from the bad and be willing to make a few mistakes along the way.

and turn your "common sense" level up to "high".

imo...

 

[inforg]

I used to hate the comparisons between domaining and gambling, but the similarities are certainly there and I have learned to embrace them.

Hand registration is like buying lottery tickets for most new domainers and rarely pays off.

Without knowledge, people who play in the aftermarket are more like casino gamblers where the house has the edge and grinds you out over time.

The seasoned and successful domainer is more like a horse handicapper or sports bettor. If you are knowledgeable, you have the edge and can consistently make money.

I do real estate as well, and while it seems like it should be comparable to domaining, it is not. Or maybe it is, but if you invested in real estate that had a 1-2% occupancy or sell-through rate overall, wouldn't that be gambling as well?

 

[Robin A.]

Not by any means an expert or full-time domainer. Just a side business. So better to take my words with a grain of salt. Made $26k profit 2 years ago which was alright. Last year only 4k. Portfolio size is only about 100. Still working to build up a 6-figure budget so I can invest in more names and especially higher-quality names that sell themselves. No use investing in domains without a large budget, even if your sell-through rate is 2-3%.

Began catching dropping domains last year, however from around January this year to today I caught only 1 domain compared to about 4-5 a week before

This is a tough market with prices higher than I've ever seen on the aftermarket. Taking a bit of a break now - maybe prices will come down with the upcoming recession. The guys with the deep pockets and the know-how and experience will always succeed in this industry.

Note: I can recommend Michael Cyger's Dnacademy course. Best resource ever!

 

[inforg]

I do not agree with this statement.
Hand registration still alive. Every month there are many good 4-figure sales that have been registered by hand recently. With one or two renewal rates maximum.

It all depends on how you like to play and the strategy you want to take.
Some players prefer to play with very premium domains in a few portfolios (no more than 500 domains)
Others prefer large portfolios with over 5.000 domains where many will not be super premiums and many of them will be hand registered.

¿Quantity or quality?
Two very different ways of trying to make a living from domains.

Maybe you missed the “new domainers” part of that statement you disagree with?

15-20% of my domains are hand registered. I also have 20+ years of experience, a diversified portfolio, and enough disposable income to cover renewals out of pocket if it ever came to that.

It is not a good new person, low budget strategy even if some get lucky at it. How many threads do you have to see with newbie trash domains to see that?

Doesn't matter, by the time they figure it out, the damage is usually done and they will be discouraged forever. I'm not going to encourage new investors to register random crap because once in a while random crap sells.

 

[Recons.Com]

If it were an investment, there would be a better ROI than maybe 1% of the portfolio will be sold.

Maybe, before making statements about what is an investment, you'd spend time learning what ROI is?

1% you are referring to is about inventory turnover, not return on investment.

1% STR could result in 100% ROI or higher, depending on your costs and prices.

 

[E-Promote]

I'm an investor. We own storage facilities, businesses, commercial/residential real estate. I have experience in web development and basic programming.

Your experience in RE should be helpful to you, domain names used for commercial purposes are essentially commercial "internet" land. Build or buy a site on that land and you have commercial "internet" RE. Cap rates, interest and ROI will be hard to find as "internet" land/RE is still a relatively young industry (at least compared to brick and mortar) but you can use that to your advantage. If it were more transparent, there would be much more competition.

 

[zomainhacks]

In investing we mostly talk about cap rates, interest and ROI. I can generally run figures and produce a rough expected ROI. I'm struggling to find out how to do this with domaining.

To do the same you have to understand how domain demand behaves, how to evaluate domain quality and estimate sale through rate. You have to be really tuned with the market and you have to be really good at recognizing patterns...

You see it as gambling since (at the moment) you lack the instruments to properly evaluate the asset class you are trying to deal with.

If done correctly, this stuff can be extremely profitable and predictable.

 

[Mkt Sales Leads]

It feels like a gamble.

I have hand reg'ed some, I have listened to advice, I have bought some at auction, listened to more advice, I have advertised on all the market places, my own website and social media.

I have not sold any (I started selling in February).

IMHO
If it was an investment, there would be more openness about buying strategies, the MANY criteria of a good buy, not just the obvious (people seem willing to share to a point)
If it was an investment the resale price would not be so subjective.
If it were an investment, there would be a better ROI than maybe 1% of the portfolio will be sold.
With investments, you have a good chance of all of the investment being able to be sold on reasonably easily (not the case with domains).

It therefore feels to me more like a gamble than an investment.

Be aware that there will be a lot of contradictory/conflicting information that you'll have to sift through and make judgements on along the way.

For example, conventional advice says to buy short, perfectly spelled names, yet you'll see some oddities (and downright stinkers) selling in the daily domain sales section here and anywhere you look for data, e.g. Namebio/Sedo sales (via TLDinvestors.com). Similarly, some don't get brandable domains or the marketplaces for these and prefer to buy dictionary word names, while others believe companies aren't into in naming themselves something generic like partnersolutions. whatever, and feel a unique brand name like wovanko /sparkslice is the way forward.

Some will say only buy at auctions where there are other bidders, yet some have sold names that they bought at auctions where they were the only bidder (like Logan Flatt).

On pricing names, a commonly held belief among some in domaining is the price of the name is whatever the buyer is willing to pay, while others believe the price is whatever the domain owner thinks it should be (usually based on whether the prospective buyer has a big enough idea for the name's use).

When it comes to selling, you'll find those who believe in setting a price (known as 'buy it Now'/BIN) while others think that devalues the name and enjoy long, drawn-out negotiations over weeks/months as they feel this helps increase the name's value.


The range of strategies to approach this venture is huge, so best of luck here.

 

[Joshh71390]

I disagree with everything in this post.

Just because your domain choices haven’t sold yet (after only 5 months) doesn’t mean we are not investors. It means you need better quality domains possibly and way more patience.

The first thing we tell newbs is this is not get rich quick. It takes years and years. Impatient people who need money now should pursue other paths. Not domains.

It feels like a gamble because you are new at this and probably bought some not great domains.

You complain this is not investing because “there is not enough openess about buying strategies”. Really? We don’t have to tell you anything. Nobody is getting paid here to guide anyone or answer questions. It is done voluntarily. Be grateful we are willing to answer the same questions countless times.

Figure it out for yourself (like we did) and stop acting entitled like anyone is obligated to spoon feed you their knowledge or strategies.

If you are looking for a sure thing, instant results you won’t get that investing in domains. Or anything really.

kind of going off this too... there is no direct path... My strategy is i hand reg good exact match keyword domains and try to resell them here for a slight markup but with plenty of upside potential for the next person... Im not going for the huge sales... just high number of low cost sales. My best year i think i sold 800 or so domains.. but many of those were under 10 dolalrs... At the same exact time im sure there was someone who sold only 1 domain that same year... And that domain might of generated 100x more profit then all mine combined... Domaining is an Industry not a Investment Class.

this website is a forum.. not a chatroom... so every post that has ever been posted is still up / categorized in a nice neat package for you... esentially your thinking too much about the domaining for domaining sake... dont just go hard and fast at domaining unless your ready to take it to a full time job... Your goal is to buy stuff that you think has a large number of potential end users....

shinyHair.com is simple enough... but who would be the end user... -> not trying to promote but just to give you a specific idea... some of the names i have right now-> oakland lawn... -> this can obviously be sold to any lawn care companies in oakland...

then i have stuff like LeadTrackingTool -> its not a top level name but it's definetly gonna get the job done -> ... now im not going to toot my own horn and try to sell these for 50k just because thats the going rate for other auctions... Im going to price them low enough to see a little bit of profit -> but im also going to make sure I dont spend too much time on any one name....

if im just registering and then selling it ... then it doesnt need to sell for 800 dollars to get a 2x 3x even 10x profit easy and fast..

also you need to think of it like this... Namepros and other Domain markets are kind of only going to market your name to other Domainers... So you need to realize if the goingrate for 123.com is 100 dollars... (obviously its about 500x more then that....) you are going to have a hard time offloading that domain here for 110 dollars... but if you can manage to get that name for 70 dollars... then you can easily sell it here and split the difference between marketvalue and the price you got it for... leaving you with some eazy money..

lastly..... you can Go after domains in a more direct approach... Only register a domain name if you can think of who your going to reach out to ...

if you own storageCenter.com -> maybe you send an email to the owner of storageCenter.net storage-center.com storageCenter123.com

and one of these people ... tried buying storageCenter.com years go and now they have the means (and years of longing to get rid of the kebab-case name) for the top level... Now you email these people directly and one of them buys from you.

The problem with what you want domaing to be is ...it's not a Savings Bond... or a CD ... it's not an investment vehical in the sense that it's a product offered with a set payout after a certain time... Its an investment the same way buying a house is an investment... Or buying a factory... -> Your asking your compition to zap their knowledge into your brain over night... it's just not physically possible if you want to learn how to be a profitable domainer.. the info is on this site...

 

[yandig]

It depends what your definition of 'semi-passive' is.

I would advise anyone looking to get into domaining to have a clear concept of how they plan to sell their domains once they acquire them. Just listing them in a marketplace like Sedo, Dan, etc...is probably not the best use of your time/funds. How much time and effort are you willing to spend to turn a decent profit?

That's a question only you can answer. Good luck!