Let’s say I wanted to start over from scratch in the domain investment space and I have just $10,000 to spend. I thought I would share how I would start over today without any domain names, $10,000 in cash, and the knowledge I already have.
I would spend as much time as it took reaching out privately to buy a single one word .com domain name. The domain name would need to be meaningful to many companies and/or people so my eggs aren’t in one basket hoping that the one prospect understands the value proposition. With this investment, I would need to be certain I could liquidate the name to another domain investor or at auction for at least the $10,000 I paid if I needed to get my cash back to start over because I overestimated the market interest.
Although this sounds simple, it really isn’t. It is very difficult to buy great, meaningful one word .com domain names for $10,000 or less. It takes a ton of time and research and a ton of dead ends. These types of deals are out there for those who are willing to go to the effort because most aren’t marked for sale and some are even developed websites.
Once my $10,000 name was acquired, I would try to find a buyer. Bear in mind that before I made my purchase, I would have done so with trademark risk mitigation and market research in mind to know that there is limited risk with the domain name from a TM perspective, there are many businesses that would want this domain name, and the domain name hasn’t been on the market or for sale before (or in a long time). I would also know how to contact prospective buyers, both from the approach and the actual contact person.
With my $10,000 investment, I would not try to get cute and buy new gTLD domain names. I would not try to spread out the risk and apply the scattershot method of registering a ton of different domain names and hoping for the best. I would simply buy the best domain name I could find for $10,000, attempt to re-sell the domain name, and do the same thing over again with the proceeds (keeping tax issues in mind).
Obviously for this exercise, I think the knowledge aspect is far more important than the cash. It has taken many years of doing (or not doing) deals, meeting people in the space, paying attention to information shared publicly and privately, monitoring domain deals and registrations, following auctions…etc. IMO, people can learn this over a period of time, but most people seem to want to invest in domain names for quick cash – like lottery tickets. This isn’t going to work out for the vast majority of people.
For people starting out, the best thing they can do is learn about the business. Read domain sales charts for weeks or months. See auction reports to understand what was listed, at what reserve prices, and what sold or didn’t sell. They should read about trademark law as it pertains to domain names. They should subscribe to broker newsletters to see what is selling and what isn’t. People should become experts in the business before spending $10k on a domain name. I wouldn’t go out and invest $10,000 in a random stock or do a few minutes of research before buying a stock, and people should consider the same with less liquid assets like domain names.
Buying domain names is super easy. You need a credit card and a mailing address. Buying a valuable domain name is much harder. You have to understand what makes a domain name great and not kid yourself about the value of a poor domain name.