The following post is courtesy of a friend and well-known, but private domain investor. He gives some strategic advice which he adheres to, and it makes him quite a bit of money. When I first started out in the domain industry, my strategy was to sell as many names as possible for thin profit margins. It takes a lot of $30 domain sales to make good money. My friend has generated PPC revenue (correction from earlier) for a few months, and then sold his names for a revenue multiple.
“This past week I sold a total of 9 minimal income domains for $2,450. I paid a total of $61.85 for them (all were reg fee). In the year I had them they made about $800 in ppc income. So my total return on a $62 investment was $3,250 with a net profit of $3,188. That works out to a 5,142% ROI. Sure I could have held them instead of selling like others try and wait till they find a 10x buyer, but odds are I’d be waiting a much longer time and would have to invest more of my time in continued marketing which has a cost factor to it and if you do that you don’t keep cash flow coming in. You want your resell domain properties to flip fast. Time is money. There’s nothing wrong with pricing to sell at 2x or 3x. It works. It moves inventory quickly. It’s the way to keep constant high profit cash flow coming out of your portfolio with enormous ROI’s.
The strategy then is to not be greedy if you want to make money in the domain biz. Make a profit, but make it possible for the next buyer to make a profit too. Where else can you make a 5,000% ROI??? I know of no investment that can do that kind of number on a reliable continuous basis week after week, but domains can if you keep your prices reasonable to sell quick. That’s the secret!”
While I plan to keep the domain names I build into mini-sites, I think my friend has a smart strategy to produce a growing revenue stream. The buyers of his names/sites will benefit from his legwork – it’s a win/win for everyone.
Nice post. I started reading your blog a few weeks back and find that each post is helping me with my own domain education. Keep up the great work.
Yes, but please tell me how many domains you bought and DIDN’T sell? I bet it’s a ton.
Good advice, Eliot. For whatever reason you did not mention your friend’s name but it sounds like “Morgan the Flipper” to my me…
***UPDATED BY ELLIOT***
It’s not Morgan the Flipper (I don’t know Morgan the Flipper). This is a person who owns some awesome generic .com names and some other great keyword domain names. He wanted to remain private for a couple reasons and I gotta respect that.
What about the value on his time? It’s not as simple as buying a $6 name and getting a 5000% return a year later. That is unless the $6 name comes with the developed site and content. Time is money… it takes time to develop a site and that time could be invested on many other opportunities. If he places $0 on his/her time, I’ve got a ton of projects I’d like to hire them for 🙂
The numbers don’t add up if this is a recent story
Can you provide 1 example from the 9 new registrations?
How can you register new names in the past 2 years and get type-in traffic on them and make that much? Is this a domain tasting example? Are these 9 domains out of 100,000 that he threw back?
“if you want to make money in the domain biz. Make a profit, but make it possible for the next buyer to make a profit too”
So true, I even said it many times to fellow domainers.
i agree that roi from sales is thru the roof but a domainer can still be underwater when analyzing his/her entire portfolio (by registering garbage names that sit).
Elliot, you got to be kidding that you don’t know Morgan of http://www.domainflipper.typepad.com You recently posted an entry about his view. Though, I agree he doesn’t have to be the investor you’re talking of on this entry.
To Terrell (above): I think you are looking for ‘free lunch’. There is no any investment that doesn’t require some energy and time inputs. The main point is that this flipper’s profit surpasses most conventional biz’s profit you can ever think of.
Hmmm, Seyi, it doesn’t if we talking about few GS only. I agree flipping is great, when you get few $-,000+ profit on each sale, then it is a good flipping. This kind of flipping is time consuming and hardly worth while. so i will agree with Terrel, there might be better return on doing something else then just flipping. We all have limited time, so ROI has to be seen trough the lens of, could he be making as much or more in some other industry, so lets not get too exited about 5000% ROI, especially when we talking of $3,000 of total money .