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How I Determine Whether to Develop or Flip

When I buy a domain name, the most significant quality I evaluate is the likelihood of it being used commercially. Using common sense, my marketing background and my consumer-savvy mind, I analyze whether a company would be willing to spend money building, marketing and branding a particular domain name as an online business. If I believe the answer is “yes,” and the price is right, I will usually buy the domain name. Since is not a tangible quality, I think this is where a huge disparity lies between people who have been financially successful and people who haven’t been as successful.
Once I purchase a domain name, I determine whether I will develop the domain name into a commercially viable business or sell it to someone else with that inclination. My first step after purchase is to try and determine the value of the domain name on the market – both to other domain investors and to an end user. If the value is worth considerably more than I paid and it’s not a project I’ve dreamed about working on, I will usually sell it. When I can quickly profit and/or upgrade easily by selling, it’s usually a no-brainer.
If the profit margin would be somewhat slim, I think about how I can develop the website on my own (with my developer) to increase the value and generate a passive revenue. Determining the type of site it would be best as is important, as there can be considerably more work depending whether it’s an informational website, offers a service or a commercial endeavor offering products for sale. I need to then figure out if I have the ability, capacity, and drive to operate and manage such a site. Additionally, I need to determine how long it would take to be profitable.
If I don’t particularly have an interest in the industry but I can build an easily manageable informational site, I might develop it with the intention of selling down the road. I have been doing this with some mini-sites, and I hope to share the results in a few weeks/months.. If I have little interest in the industry, and the site would take time and a considerable amount of money to develop, I will look to sell – even at a slim profit margin.
For me, development is equal parts enjoyment and equal parts profit. I am a history buff, and I like direct marketing (I was a History & Business major in college and have a Master’s Degree in Direct Marketing). This is just one reason why geodomains (such as Lowell.com and Burbank.com) are perfect for my business. My goal is to make a comfortable living – to enjoy life without many worries about money. I earn hotel and job revenue, and I am going to begin soliciting local businesses very soon. In fact, I received this nice submission on Lowell.com while in New Orleans:

subject : Lowell Form Submission
redirect : thanks.html
Name : xxxxxxxxxxxxxxx
Company : xxxxxxxxxxxxxxx
Email : xxxxxxxxxxxxxx@gmail.com
Phone : please email
Website : xxxxxxxxxxxxxxx
Comments : Could you please send me a rate package to advertise on your website, it would be a small 125/125 button preferably on your main page for a small business I own
submit1 : Submit

Personally, I would prefer a solid geodomain over almost any other type of domain name for several reasons.

  • The branding is already accomplished (assuming it’s the exact name of the city/town)
  • Many people type-in the domain name directly (57% for Lowell.com)
  • Can be informational or service oriented with ad sales depending on how much involvement owner wants to have
  • Huge opportunity to grow via search engine optimization
  • Almost all large US city .com names are currently developed (largest 250 cities in the US), so they don’t come on the market often I would still pay up to $100,000 for an east coast US city .com (I didn’t receive a single offer meeting my requirements.

It’s important to note that I am still generating most of my revenue by selling domain names. I am a “one man show” here and it wouldn’t make sense to overwhelm myself with development projects as there aren’t enough hours in the day.   I love my fiancee and my friends enough not to become a slave to this business, although they all know how much I love this business. I will slowly develop some of my domain names into revenue-producing websites while I continue to sell other domain names. As my websites continue to grow and generate more revenue, I will be able to scale down my selling to develop other websites.
This is the first business I have run entirely on my own, and it’s a learning process. Just like learning which domain names to buy is important, it’s equally important to learn which domain names to keep and develop and which names to sell.

I Love Nola

Just returned from my trip to New Orleans. While I think three days is long enough to be down there (especially the French Quarter), I had a great time. Dinner last night at Arnaud’s was amazing, and it was fantastic being down there with great friends and my Dad.
I need a bit more time to recover from the Hurricanes, bourbon, tequila, Purple Haze and other unmentionables, but I will be back to normal tomorrow. I even wrote a blog post on the flight, so it will be easier to get back to the groove.
Thanks to everyone who wrote emails and posted comments. See you tomorrow!

SHOW ME YOUR……. Domains!

I won’t be blogging, moderating comments, or responding to emails for the next few days, as I am headed down to New Orleans for my bachelor party. I will be back on Sunday night, and I should be back to normal by Monday.
In the meantime, feel free to use the links on the right hand side while I am out of town.

Coffee.org Sold for $100,000

According to an article I just read on Reve News, it looks like Coffee.org was recently acquired for $100,000 by Bill McClure, former Chairman of Traffic Strategies. McClure intends to build a coffee distribution website, and Coffee.org is certainly a great domain name to do that.
I’ve said in the past, there is a certain trust factor with the .org extension. While this may slightly work against McClure with a commercial enterprise, it would be easy to overcome if he also makes it a valuable informational resource all about coffee.
According to a quote from McClure in the Reve News post,

“Coffee is the second largest traded commodity, next to oil and has grown from $8 billion in sales in 2001 to over $ 13 billion today.” says McClure. “Studies show that throughout the world, people consume more than 330 million cups of coffee each and every day. This makes black coffee the most popular drink after water and even beats tea as people’s favorite drink.”

Thanks to Brad for sending the link to me!

Mining the Long Tail

I am in the process of developing a debt-related mini-site. I am writing the articles for it and would like some keyword research related to debt so I can mine the long tail and dominate the long (but high paying) keywords. I want to target some low hanging fruit keywords that others may not notice. The competition will be less, and my site will hopefully rank higher.
Can anyone recommend a place to get a large list of keywords for a good price?

My "Relentless Attacks" on Unique Extensions

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I was looking in my trackbacks today and saw a trackback from a blog to my post “.Mobi Meltdown” where I linked to another blogger with whom I agreed about .mobi names at the TRAFFIC auction. I was going to respond in the comment section of that person’s blog, but I ended up writing quite a bit and figured I would give my thoughts more exposure rather than burying them at the bottom of someone else’s blog.
From DomainerDeveloper.com:

“I must reiterate that I find it disenchanting and absolutely remarkable how so many credible, domain industry veteran investors appear to still be missing the mark when it comes to understanding these fascinating domain extensions. Instead of exploring the many possibilities and communities that are building up around these unique extensions, they continue their relentless attacks.”

First off, I disagree that I have been a source of “relentless attacks.” Before last week when I asked “Is There Money in .Mobi Development,” (which only received one affirmative response with hundreds of page views) the last time I even mentioned anything about .mobi was a February 7th post where I was commenting on someone else’s post about the trouble facing .mobi in getting consumers to recognize and adopt the extension. Prior to that, my last mention was way back in December – a lifetime in this business. If this is considered relentless, that’s pretty weak.
Aside from this inaccuracy, I must ask one important question. Why would I care about .mobi or .any other extension when I can do the same shit with my .com names? If I believe many mobile users are navigating to my websites, I can make sure the mobile browser is detected to give the visitor an optimal experience. Whether I own the .mobi or not, my websites can be mobile-ready, just like thousands of other large companies who may not have even heard of .mobi (or own their .mobi names for protective purposes).
I don’t have the time or bandwidth to develop more than a few domain names at a time. Why would I want to mess around with an unproven extension when I can stick to .com? I am sure there are plenty of people who have plenty of time to experiment and try to earn a return on their investment, but I don’t have the time or the desire to become a .mobi missionary.
At this moment, I don’t envy people who paid mid 5 figures recently for .mobi names to see the 13 “premium” names sell for no more than $18k at last week’s TRAFFIC auction. I’ve said it before and I will say it again, people like Rick Schwartz can afford to take a $200,000 gamble on a .mobi or .whatever domain name. If he hits paydirt in 5 years, people will still probably be jerkoffs to him, but it is his prerogative. I don’t see a very active market for .eu domain names, and I am not familiar with too many that are developed, although there were many people who spent thousands of dollars on those names.
When I buy a domain name for development, I make sure the name is as liquid as possible in the event things don’t work out. If I wanted to sell Lowell.com, Burbank.com (currently under development), WeddingEntertainment.com or a few other names I own, I could make a profit because I bought them for fair prices. If I paid $25k for a non-“premium” .mobi name, I wouldn’t be happy at this moment knowing what these recent “premium” names did. That was the point of my last post.
Sure, maybe 5 years from now some alternate extension domain owners will hit paydirt. IMO, it would have been smarter to invest in more liquid domains in the .com extension either for development or to flip. Are condo investors in Vegas or Miami happy when they see much lower comps on similar condos that they own? Are they willing to wait out the market? Some are, but many are just trying to not lose their shirts when they sell rather than waiting out the market.
Sure, maybe I am “missing the mark,” but I think we are aiming for different things.

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