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.