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.