As someone who tries to get good deals on domain names to flip them fairly quickly (ideally one day to 6 months), one of the biggest issues I face is getting full value for the domain name assets I want to flip rapidly. It’s not usually easy to buy a domain name and quickly find a buyer who is willing and able to pay close to its retail value, but that is the goal in this cash flow dependent business. Domain flipping is one objective of my business, but it’s not easy to get the full value for domain assets with that business model.
If I buy a domain name for $50,000 because I think it’s worth 6 figures, I could have to wait a while to sell it for the 6 figure valuation (that may never actually come to fruition). Sitting on expensive domain names isn’t the worst thing, especially when they earn passive PPC income,, but for a business that relies on the cash from the sale of domain names in order to operate and grow, it isn’t optimal either.
The opportunity to sell a domain name at a great profit beats most other typical investments, and it surely beats the bank interest that would be earned with the same $50,000 in a savings account. The flip side is that a domain investor has to be certain the $50,000 domain name is really worth what he or she thinks it’s worth because domain names tend to be illiquid, and there could be a steep drop from the $50,000 price if it was put on the market with an urgent need to sell. Having too many of those $50,000 domain names can stifle growth and acquisition opportunities.
During the last four or so years, I’ve been building alternative revenue streams with my domain names to enable me to pass on low margin offers when I think the domain name is worth much more in better conditions or to the right buyer. When I didn’t have those revenue streams, I may have had to undersell domain names to drive cashflow. If you are a domain investor or are hoping to become a domain investor who flips domain names for a living, this is a consideration that has to be made. Great profits are very possible, but prospective investors need to be mindful that this tends to be an imperfect market with generally illiquid assets.