Flipping domain names for profit is one of the hottest trends in today’s tech-centric world. If you’re planning on investing in domain names, there are crucial things to know.
Online stories about enterprising investors who accumulated considerable wealth through domain name flipping have spread like wildfire. In 2009, online marketplace Quinstreet purchased ‘insure.com’ for a whopping $16 million.
Domain names like ‘business.com’ and ‘hotel.com’ reportedly sold for $7 million and $100 million respectively.
The whole process sounds simple – you purchase a bunch of domain names and sit on them hoping they appreciate in value. Once the timing is right, you sell them to the buyer with the highest bid and you’re thousands or even millions of dollars richer.
Sounds easy? Think again.
Wide-eyed investors get drawn to these inspirational stories like moths to a flame, instantly diving in without the education required to back them up and inadvertently losing heaps of cash in the process.
Around 183 million domain names have been registered but remained unused since 2013, with a large chunk hoarded by domain name flippers who plan to resell these domains to potential buyers.
My favorite marketplace to find new opportunities to sell and buy domains is Flippa.
But much like flipping properties, there’s an established science behind the process of domain name flipping.
If you’re looking to make money with domain names, get ready to take notes. Here are all the insights, tips, and guidelines needed to emerge successful in this investing business.
Things you need to know about domain name trading
It won’t make you rich overnight
Here’s the hard truth: very few domain names can be sold for six-figure amounts and your chances of being a millionaire overnight are very slim.
You’ve probably heard motivational stories of flipping domains, and while most of them are true, they don’t happen all too often.
Domain name investing is great for people looking for a side-hustle to support their main income, not for investors looking to make it a full-time endeavor.
Domain name flipping requires real work
While most people think that flipping domain names is a perfect way to make passive income, you’ll quickly discover that the practice involves real work.
You’ll have to put a lot of time in selecting good domain names while simultaneously looking out for prospective buyers to sell names you already have. It’s impossible to make a great profit without putting in a few hours every day.
Once you’ve purchased a domain name, you’ll have to feel out the perfect opportunity to seal the deal.
You’ll need expertise in marketing, research, networking, and negotiation as well.
It takes some time to learn
Successful domain name flippers are those who have built experience. Those who do great at the business took at least a year to study flipping strategies before starting to make a sizeable profit.
As a beginner looking to get paid with domains, you’ll have to be prepared to make several blunders, like losing money over names that won’t sell, missing out on deals, and more.
For most beginners, there could be a steep learning curve.
See Related: 15 Powerful Income-Generating Assets
5 steps to make money with domain names
Now that you already know what investing in domain names entails, it’s time to get down to business. Here are five steps on how to get started with domain name flipping.
Have a focus
Dive into the domain name market and you’ll discover millions of domains that have already been registered along with endless combinations that have not been taken yet. You also find hundreds of new domain name extensions like .club and .app that further expand the endless variety.
With so many options, it can get overwhelming, so it’s wise to narrow down your focus to domains in fields that you’re familiar with.
Having knowledge about a particular field gives you leverage in selecting the right domains and selling them to the right people.
- Do you know a lot about pets? Purchase .pet or .dog domain names.
- Do you work in the healthcare field? Opt for .doctor or .education options.
- Are you in the vehicle or real estate industry? Try purchasing .realestate or .car extensions.
It’s so much easier to sell a domain name that you know will be valuable to a specific industry.
Try checking the strength of the keyword through platforms like Keyword Planner and Google Trends.
Select valuable domain names only
Here’s where things can get tricky when investing in domain names.
Finding the best options to purchase depends on several principles, most of which we’ll discuss.
- Generic words. Generic names for services, products, businesses, geography are those that are likely to get sold for a higher price. Examples of these are dogcare.com, minnesota.net, dragracing.org.
- Short, easy-to-remember names. People are more likely to remember and identify with websites that have short and easy-to-remember names (one-worders are great choices). Domain names with common words enhance recall and offer opportunities for creative marketing.
- Top-Level Domain (TLD) names. Domain names such as .com, .net, and .org are TLDs – domain extensions that are more common for people to search compared to other domain names such as .tv, .biz, or .me. While the latter is a lot more affordable, selling them requires more marketing effort.
- Brandable domain names. Brandable domain names are types of names that can be marketed to stand for something else other than what the words strictly mean in the dictionary. For example, Amazon.com isn’t about rivers or jungles, but the name clicked. One-word brandable domain names are more valuable but harder to acquire. Two to three-word brandable domains, although less valuable, can still be profitable.
- Be wary of unmarketable domain names. Domain names with intentional misspellings and those with added suffixes and prefixes like “my” or “e” can be difficult to sell (an exception would be very big brands like eBay). While some of these can be very brandable, the chances of selling them can be very rare.
- Choose names that are relevant to your target buyer. If you were a buyer of the domain names you are selling, would you purchase them? Why or why not? What makes up a valuable domain name to your target market? Use your answers to further refine your search for marketable names.
Check if the domain name is available
So you’ve already narrowed down your search and you’ve determined which types of domain names are valuable, now how can you find and buy them? If no one owns a domain name, you can buy them as a new registration.
Most of the time, your domain name selection will be taken, so you must head to the aftermarket to buy them from people who already own them. When investing in domain names, here’s where to find them.
If you’re using GoDaddy Auctions, use the advanced search to target the type of names you’re looking for.
You can narrow your results by keyword, top-level domain, price, and a lot more. You’ll find it easier to sort through millions of domains by intelligently filtering them.
Check for expiring domains. A lot of websites will have expired domain registrations – this is a great opportunity to move in and buy them if they fit your preferences.
Check out websites like ExpiredDomains.net, and make sure to check out the history of the site using Archive.org just to make sure that it wasn’t associated with unethical activities like copyright infringement.
It’s best to stay away from sites like these.
See Related: How to Start Book Flipping for Profit
Figure out the price
Determining the selling price of your domains can be tricky, but there are a few ways to accurately appraise each one.
Compare your domain name with similar names. You can use websites like namebio.com to compare the domain you’re looking forward to purchasing with similar domains that have already been sold.
Type in the keyword and utilize the website’s search features to come up with names that are similar to yours, when they were sold, and how much they were sold for.
You can also check out domain sales on platforms like Afternic or GoDaddy Auctions.
Use appraisal tools. GoDaddy’s Domain Name Value & Appraisal tool allows you to get accurate pricing estimates using machine learning and market sales data. While it gives you estimates of what the price of your domain name should be, it shouldn’t be your only method of pricing. Use the results and compare them with your own research.
Stay firm on the price. Be adamant about the price you set for your domain, but also consider opening it up for auction for possibilities of selling for an even higher price.
See Related: How to Make Real Money Online
Look for avenues to sell
You have a strong collection of domains to sell, now where do you find the right buyers?
Investors looking for where to buy and sell domains will discover many platforms, but there are a few things to consider when selecting the best one.
- Figure out the venue’s reputation. When investing in domain names, it’s absolutely essential that the platform you choose for selling your domain is trusted. There should be guarantees that you get paid to trade domain names and that your buyers actually get the domain they paid for. Use the Better Business Bureau when sizing up trusted bodies. Using trusted venues will give your buyers confidence.
- Size up the distribution network. How many people are using the platform you selected to browse for domain names? Venues like GoDaddy, Flippa, and WebsiteBroker are platforms with a strong distribution network, making them the best places to buy and sell domain names. Read more about a place to buy and sell in this full Flippa review.
- Employ outbound sales. Reach out to people you know who would benefit from your domain names. If you selected domain names that are relevant to your industry as previously suggested, then you won’t find it hard to express the value proposition of the product to a potential buyer.
Outbound sales also include selling your domains to potential investors. This method will most likely end up with you having less profit, as investors are looking buy for cheap then flip domains for profit.
While this isn’t the most ideal strategy if you’re looking to earn a lot, this is a good way to sell quickly when investing in domain names.
Include a ‘for sale’ message on your domain name’s website. This strategy is easy to do. Select a service that can help you create a landing page that displays your domain name as for sale. Whenever someone visits your domain name, they can easily inquire about purchasing it.
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