Real Estate vs. Domain Names: $$$ > ROI

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A Google Alert notified me about Irv Erdos’ weekly humor column in the San Diego Union-Tribune newspaper. In the article, Erdos discusses his domain name investment vs. his friend’s real estate investment. It illustrates the difference between a domain name investment and a real estate investment.

Here’s an excerpt from the article:

“The one area where there is a mammoth gap is in our relative assets.

Last week, Bobby closed a sale on an investment property he bought years back.

At roughly the same time he purchased that real estate asset, I chose to invest in domain names, one of which I recently sold at a multiple of 150 times my original investment. That was infinitely greater than Bobby’s return, which was a meager three times his purchase.”

While the ROI on a domain name investment might be exceptionally high, the real estate investment was at a much higher cost. Thus, the actual financial windfall was substantially higher.

One thing that was not discussed was the additional costs associated with real estate. I am sure Bobby paid substantial real estate taxes on his investment over the course of its lifetime. If the investment was a home or building, there were ongoing upkeep costs, such as electricity, landscaping, repairs/replacements…etc. Comparatively, domain names cost something like $10/year, whether the domain name is worth nothing or is worth millions of dollars.

There are advantages and disadvantages to each type of investment, and I thought this was a humorous comparison to share.

19 COMMENTS

  1. Jist as Nike Mann’s situatiin, the calculation shouldn’t be around one property but about a portfolio. How many domains he registered and didn’t sell, will never sell?

  2. I picked up a domain name in a GD expiry auction for $11 this year. Sold it for $12,000 less than 100 days later.
    Better annualized ROI than buying Amazon stocks at IPO, better annualized ROI than buying Bitcoins in 2010. Friends go nuts when I tell them about it because they can’t get their head around. Problem is, you just can’t scale it. Either you got lucky or you don’t. So it’s always ROI on your portfolio, that is the only metric that makes sense. Plus the total amount of money you’re making. A guy that buys a $10m commercial real estate project and sells it for $15m just makes a “lousy” 50% ROI on paper pretax, but the $5m he’s pocketing from the deal is probably more than 99.9% of all domainers will make in their lifetimes.

  3. The next 20 years of domain investing will look a lot different then the last 20 years. Domains may not even be needed in the future but real estate will always go up in value.

  4. Real Estate-it all depends on location location location, if you live in the shee*& hold place , then real estate sucks but where I live, my property value has gone up in million$$$$
    People need to eat, shit ,and sleep- real estate will always be in demand in both good times and bad times.

    Domains–ha–just a BS hobby…

  5. The way I see it, you can make good ROI on both professions as long as you know what you are doing and make solid investments. Even though there are similarities in the aspect of buying and reselling for a profit, each profession requires different skills and upfront capital to make it work.

    – Will

  6. Good day,
    My business is investment real estate. I am 64 and have been doing it for 30 years. I love domain investing and there are some similarities. Certainly it is true that the returns can be exponentially higher with domains than real estate.

    Real estate, however, has many other advantages. Domain investing and real estate investing are not able to be compared to each other on many levels IMO. There are many tax laws benefiting real estate such as depreciation, opportunity zones, LIHTC, tax increment financing and others. The expenses you incur are paid by your tenants, so while you hold the real estate, you are making money and saving tax dollars. Lenders understand real estate and because you make money as you go, you can leverage the amount of money you put in to the amount of real estate you buy and essentially make money on OPM.

    Don’t get me wrong, domain investing has it’s important place and can return multiples real estate can not, but real estate has its advantages in other ways.

  7. Interesting….. I make some comparisons in ROI lately between the most expensive investment assets in the world ie domain name, bitcoin, art, diamond and property.

    Domain name is 1st, property is 5th position

    THE TOP ROI ( RETURN ON INVESTMENT) IN THE WORLD:

    1st. Domain Name, Cars.com: With ROI = 9,182,311 % increase per year

    2nd. Bitcoin: With ROI = 4,675,414 % increase per year ( when invest early in 2010)

    3rd. Art “Christ”: With ROI = 333,325 % increase per year

    4th. Diamond, Pink Star Diamond: With ROI = 39,556 % increase per year

    5th. Residential, Villa Leopolda: With ROI = 80 % increase per year.

    Full story at https://nameii1.wixsite.com/otcbid/post/otcbid-18

    • Update – Bitcoin beats Cars.com

      New info released from Saifedean Ammous, “Ten years ago today, 5,050 btc were sold for $5.02 in the first market transaction for bitcoin.
      Today, they’d be worth $42,171,792.50.
      A rise of 838,078,685%.” – Saifedean Ammous
      ie. ROI = 83,807,868.5 % per year

      If Invest In 2009, sold in 2017
      Dec 18, 2017, 1 BTC = $19636.8
      Oct 11, 2009, 1 BTC = $0.000994
      ROI = 275,642,961 % per year

      https://nameii1.wixsite.com/otcbid/post/otcbid-18

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