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Location, Location, Location

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One of the first lessons in a real estate course is that the most important factor in site selection is the location. As the famous saying goes, “location, location, location!” If location is the most important factor in where to purchase real estate, why wouldn’t the domain name be one of the most important factors in where to open an online business? Why is it that most business schools merely gloss over the domain business?

I don’t believe a bad domain name can break a company with a good business model. I think a bad name can be detrimental, but it’s nothing that good SEO, Keyword advertising and old fashion marketing can’t fix at a high cost of course. I do believe that a great generic domain name can position a company much better, and it can make it easier for customers to find the company. If two companies offer the same product, same customer service and fulfillment, and similar advertising, I believe the company with the better domain name will see better results both in terms of search engine placement and natural traffic.

10 Domain Investment Tips for Beginners

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Sahar’s post and a thread on Rick Schwartz’ Targeted Traffic Forum got me thinking about what advice I would give to someone looking to enter the domain investment business. Since I have a couple of friends who recently started out in this business as a hobby, I have a few pieces of advice that I shared with them and will publicly share.

1.) NEVER ever register domain names with famous or somewhat famous trademarks (or trademark typos). Either you will get burned or live in fear if you buy them. Not to mention that the money producing ones are registered (mostly by keyword scripts), so it would be a waste. Additionally, stay away from domain names of athletes, celebrities, politicians…etc.

2.) Read as much information about domain names and the industry as possible. It takes a gut feel to be able to do well in this business without spending a fortune on new registrations. You may end up wasting alot of time and money registering domain names that have no meaning or value to anyone but you. I have a list of valuable domain resources in my blogroll, and you can go from there.

3.) Get a feel of what’s selling in DNJournal’s weekly sales list. See previous sales prices on DNSalePrice.com. Check out what’s closing on Sedo and Afternic as it is more likely that a rookie will have access to names that don’t make DNJournal’s sales list. It might be wise to focus on a particular niche at first (like LLL.com names or financial names for example). Try to find unregistered domain names that are similar to ones that have sold.

4.) Sign up for one of the public domain forums and read as much as you can. I believe DNForum.com offers the widest variety of information, but DomainState.com and NamePros.com are also great.

5.) Always be honest in your business dealings. Although most business is done online in the cyber world, almost everything is traceable. No matter how many online personas you may create, you will be known for what you post and how you post it. If you are dishonest, it will probably haunt you, so don’t start off on the wrong foot. There is no such thing as “easy money.”

6.) Ask some of the more seasoned domain investors for advice. I’ve met many people who have been successful in this business, and most are very willing to give out advice. Alot of people spend hours in front of their computers focusing on various projects, and human interaction is greatly appreciated. Personally, I like speaking about domain names, and it’s great to see new people in this business finding success.

7.) Read the news, popular blogs, trade journals…etc to find and become knowledgeable about current events and new trends.    Buy non-trademarked names related to those trends you spot.    Never try to capitalize on a tragedy or other event no matter how much money you can make in a short period of time, unless you intend to build a “real” memorial site. Think of it this way, would you want a New York Times headline to read: “Cybersquatter John Doe Takes Advantage of Families of XXXXXXXXX Tragedy?”

8.) Don’t spend thousands of dollars on a single name until you have a plan that does not solely rely on ppc monetization.    It is likely that the seller isn’t selling a high earning ppc name for less than market value, so it will be difficult to find a deal.    Also, don’t buy an expensive name until you have the resources already aligned to implement your plan.    As Darren Cleveland mentioned in this post, development is difficult, can be expensive, and can be time consuming.    Unless you need to act immediately, hold off on buying high value names.

9.) Do your due diligence when buying a name in the aftermarket.    As I said in this post, you should do a Whois history check, call previous owners and search the forums/boards for any issues.    If you buy a stolen domain you may lose your money and the domain name.    Aftermarket sites like Sedo are not immune from domain thieves.    You should also use an escrow service like Moniker or Escrow.com for higher value transactions.

10.). Keep good records of your domain portfolio, sales, expenses and contacts.    Use the contacts as leads for other domain names or even for open discussion.    Track your domain names as you would track stocks in your investment portfolio.    Always be honest on your taxes because the penalties could be much more than what you would gain.

Domain investing is a great hobby or profession for many people. I believe it is still the “wild west,” and as such, special precautions need to be taken when going into this business. If something seems too good to be true, it really probably is. Trust your gut, and if you need help, feel free to ask.

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