DomainInvesting.com

Nearly a year ago, I left the corporate world to become a full time domain investor. I didn’t really know much about running my own business in a full-time capacity, but the time was right, and I’ve never looked back nor have I regretted my decision. I’ve been fortunate to make some good business decisions and have had many more good days than bad.   While being an independent domain investor may look like the perfect lifestyle, there are many things to consider before committing to it.
If you aspire to become a full time domain investor and/or developer, there are some things you need to take into consideration before making the jump:

• Health insurance is expensive
• If you make $100,000 profit on a $150,000 sale, you will owe something in the ballpark of $35,000 in taxes. If you reinvest $125,000 of that sale, you are in the hole $10,000.
• Paying estimated taxes 4x per year can be a burden and require you to pay upfront based on your prior year’s earnings
• Working alone all day without office mates or cubicle buddies can be lonely
• There aren’t many people who can give you completely unbiased advice.
• Every domain you buy (especially for a large sum of money) can materially impact your business
• You always need to keep cash in reserve for unexpected expenses or domain names that become available to buy for a good price
• It’s important to consider business insurance (which is expensive)
• Development takes time and costs a lot
• There will always be issues and problems when you develop.   Expect to have unexpected added costs and time issues
• It’s important to have a good family and friend support network to help you up when you are down and to help you celebrate when you have success
• You will frequently want to talk about your business with your friends since you can’t chat much with co-workers, but your friends won’t always want to talk about domains with you
• It’s important to stay humble.   You might make a $100,000 sale one day, but make an unwise investment the next day.

I have truly enjoyed the year so far, and I am glad to be attending another TRAFFIC show.   There is still money to be made in the domain industry, but it does take quite a bit of work.   Although I don’t work constantly from 8am-11pm, I am on my computer most of the day.   I love what I do, but I’ve learned a lot of things about the industry this past year and about myself.   I don’t think there is anything I would change.

It’s important that you think about your domain investment strategy each day, and how your purchases and sales impact your strategy, both today and in the future. While most people have an idea of what they are looking to gain from their domain investments, I think answering some of the questions to yourself will put things into perspective:

• Do you sell your domain names?
• Do you buy domain names with the goal of selling them in days, weeks, months, or years?
• Do you buy domain names with the goal of building websites on them?
• Are you spending more money on domain purchases than you are generating with sales and advertising/PPC revenue?
• Are you buying risky domain names (trademarks, typos, gambling…etc)?
• Are you reaching out to potential buyers, or are you passively holding your names?
• Do you park your domain names?
• How much passive revenue are your domain names generating?
• How much are you spending on new domain names vs. generating from sales/PPC/advertising revenue?
• Is this a hobby for you, or do you hope to grow this into a full business?
• Do you have enough money in reserve to fight a UDRP or a lawsuit?
• Are your domain assets diversified (different types of names, various extensions…etc)?
• Are you involved in the industry in domain forums, and/or do you attend domain conferences in order to network with others in the industry?

These questions are somewhat personal and should be considered by people who are buying, selling, or developing domain names. Strategies can change, especially in changing economic times, but it is important to think about what your strategy is. I know of many people (myself included) who had no strategy in the beginning. Basically, you will be left with a lot of domain names that you like (and maybe nobody else), and while you may sell on ocassion, it’s not covering your expenses.
It’s very easy to spend a considerable amount of money buying domain names. Buying domain names smartly, while thinking about your strategy – short and long term – will save you money and make you money. Domain investing can be lucrative, in good times and bad. Developing a strategy and always considering whether you are sticking to your strategy will keep you in line to meet your objectives.