While at the TRAFFIC conference a couple of weeks ago, I met a number of people I hadn’t met before. Most of these people had heard of my blog, but a couple of them asked me what I do aside from my blog. I explained what I do to them, and I thought I would also give you a general overview of my business.
Before I get into it, I recommend reading Shane Cultra’s post about the three important aspects of his business. I think he said it well, so I will use that as the baseline for my post to give you a better idea of what I do and how I make a living as a domain investor.
Cash flow: This blog generates a decent amount of income. I am usually paid at the beginning of the year or quarterly, and the income has become more consistent over the last three years. Other websites my company owns, such as DogWalker.com and DogPark.com also earn a consistent monthly income (less, but consistent). Finally, domain name leases, financed domain sales, and on a smaller scale, PPC revenue, round out the consistent cash flow for my business.
I bank on this income to cover my overhead. This income also allows me to take on greater domain investment risks than I’d be able to take on without the income, including domain acquisitions and rejected offers. I am able to project with some level of confidence the approximate monthly income I will earn, without including income from domain name sales, which can fluctuate.
Higher Margin Products: When someone asks me what I do, I tell them that I sell domain names. This is where I earn the majority of my income. Some months are better than others, but I am always actively buying and selling domain names in the aftermarket. I would guesstimate that the majority of my domain sales are in the $3-15,000 price range, and the profit margins are “healthy.”
I spend quite a bit of money on domain name purchases, and I have to pay taxes on the profit from sales, so I need these sales to keep my business growing. Although my sales numbers are hard to predict, they’ve become pretty consistent. Some months they might be low and other months are high, but it evens out. The only issue is that I am required to continuously buy and sell to keep my business growing and the cash flowing.
The Gamble: With considerable competition from other domain investors, as well as the reluctance of sellers to part with their domain names, I often pay more than I should to acquire specific domain names. When I buy a name for $20,000 and my trusted friends/colleagues tell me it’s worth $10-15,000 reseller, it’s a bit concerning. However, buying high value and high priced names in the aftermarket can yield big profits, especially because many of these purchases are from people or companies that have held the names for many years, and they haven’t been on the market before.
Many people are discomforted when it comes to making 5 figure speculative purchases, but you need to gamble on some names to make large sales.
In addition to this, I often keep names in my portfolio that I don’t have an interest in selling unless I get top dollar or get a buy out offer for my entire portfolio. A domain name like SHS.com wouldn’t be for sale unless I got a huge offer. Turning down $50,000 for the name was an educated gamble, but I would rather have the name than the cash.