At a high level, domain investing appears to be a simple money making activity. Buy great domain names at good prices and sell them profitably to buyers who want to build businesses on them. In practice, profitable domain investing is a capital-intensive business with considerable nuance.
This morning on Twitter, I came across two very good pieces of advice new domain investors should consider.
The first is from AbdulBasit Makrani:
It can be either intentional or by mistake. Can’t say for sure. Also I suggest not to buy domains with only one potential buyer in sight.
— AbdulBasit Makrani (@abmakrani) December 13, 2023
This is wise for at least two reasons. The first and most obvious reason is that if the one prospective buyer doesn’t want to buy the domain name, nobody else will. There’s also a pretty good chance that prospect had the opportunity to register or acquire the domain name but passed. The second reason is the potential for trademark risk. If the brand is unique – and there is only one brand – buying the matching domain name could be a trademark violation. This could turn the domain name into a liability.
The second piece of advice is from Robin Hablani:
A piece of advice for new Domainers.
End users don't by CRAP! That's the reason why domains don't sell.
Ex:
MenInBlack makes sense✅ whereas MensInBlack doesn't❌
It's harsh, but true.
Good Luck🤞😊
— Robin (@RobinHablani) December 12, 2023
This should be the most obvious, basic advice for someone who wants to buy domain names. Unfortunately, there are many people who don’t understand. I have often chalked it up to language / translation issues. It’s a reason why I tend to stay away from domain names in non-English languages.
One way someone can ensure their domain name makes sense is to search the term in Google with quotes. A search of “men in black” would yield many results, while a search of “mens in black” would not. Unfortunately, Google stopped showing the number of results, which makes this a bit less useful.
Domain investing is not a get rich quick business. There can be a steep, costly learning curve to achieve success as a hobby or a business.
Unless you are convinced that one buyer will need the name if they are well invested into it .I sold a name with one buyer in mind just last week.All they needed was a two word brand name but they added mfg to what they have been using .
So reminding customers it is brand + mdg didn’t make sense .Sold for $5k after they missed out paying $2k 6 years ago .
Newbies who don’t know much should stay away from one buyer if they haven’t done their research. I also sold another name for $26999 with one buyer in mind who happened to be a big fitness company. This time with the word group after the brand name .They later secured their brand name after buying my name .
Most people buy crap because they don’t don’t do research. Then complain that domaining is dead. Sometimes companies drop names mistakenly also ,and must have secured the
Com to protect their brand or leak .
A piece of advice for new Domainers
Don’t follow any advice.from those so called domain experts.
Domaining is like growing up,you need to make mistakes along the way,that how you learn about life experiences.
Domaining is not rocket science and not surgery, nobody dies,when you made your first sale you should thank BullshitWebsites.com
“This could turn the domain name into a liability.”
A domain name doesn’t turn into a liability – it starts its life as a liability.
From an investment perspective, you as an investor buy a domain name and then promise to pay that annual renewal fee every year for as long as you wish to remain control of the domain name. That’s a liability, not unlike an annual property tax liability or a monthly premium payment on a life insurance policy if you wish to retain control of the benefits of ownership/policyholder. Unless you as an investor monetize the domain name in some way to generate cash flow that offsets the annual renewal fee while holding it in your portfolio, the domain name is not truly an investment asset in the cash-on-cash ROI sense. If you don’t find a way to offset the annual renewal fee, the domain name is draining cash out of your pocket every year until – and if – you can sell it.
From an accounting perspective, you carry a domain name at cost as an asset on your balance sheet and book an annual renewal expense on the income statement each year it is incurred as you hold it. When you finally find a buyer who pays you a premium for your domain name and you transfer it away, the carrying cost comes off the balance sheet into Cost of Goods Sold on your income statement, a big chunk of cash comes onto the balance sheet as an even bigger asset than the cost of the domain name, and the annual renewal expense goes away from your income statement because you no longer control the domain name.
You reduce the liability of owning a domain name by 1) monetizing it, or 2) selling it.