Domain investing can be a lucrative business, but it is not without its challenges. I thought I would put together a short list of four challenges that many domain investors face.
As always, I invite you to share your thoughts on these four challenges, and I also invite you to add additional challenges you face with respect to investing in domain names.
4 challenges of investing in domain names:
Liquidity – I think the greatest challenge for people in the domain investment space is the lack of liquidity. You could own an exceptional domain name, but if you need cash quickly for something, it can be difficult to extract close to its value in a short period of time. Further, if you want a loan to buy a domain name or want to use your undeveloped domain name as collateral, there aren’t many sources to get cash quickly.
No price guide – There is no definitive price guide to reference when you want to find the value of a domain name. Many (perhaps most) major sales are not publicly reported, and every domain name is unique. Without accurate public comparable sales and with even slight nuances causing massive value differences, it is not easy to pinpoint a valuation. This makes it more difficult to be certain about spending money on expensive acquisitions.
Biased resources – There are many great sources of information about domain names. There are blogs, forums, domain consultants, e-books, and other sources of free and paid information. Just about everyone has their own conflicts and biases, and it can be difficult to know who to trust for good information. I do not think there are many people who intentionally want to mislead anyone, but people have certain niches, have made inroads in their own ways, have products / services to sell, or are otherwise biased. The most successful people tend to keep things private, and those who share may do so for a reason (I do it because advertisers pay me!).
Technical aspect – Domain names are intangible “goods” that essentially exist in a massive database. To use a domain name, people need some level of technical knowledge in order to change DNS, update contact information, initiate transfers…etc. Some registrars have great customer service, FAQ / support areas, or have easy to use interfaces, while others are more complicated. There is still a technical component to domain ownership that can make it a bit challenging and can make people apprehensive about buying domain names.