The beginner’s guide to domain investing
With the increasing number of internet users, the domain industry has seen solid growth over the past 20 years. There are more than 350 million registered domain names till the end of 2021.
However, the domain names aren’t merely your website address but a long-term and highly lucrative investment for internet investors around the world.
Called the internet’s real estate market, domain investing has grabbed massive eyeballs in recent years.
And, the reason is pretty simple: you can start investing for as little as ₹797.
Here, we’ll talk about what domain investing is and how to buy and sell domains in step-by-step procedure.
Domain investing defined
Domain investing, or domaining, is a practice of buying a domain in pursuit of making a profit. You buy a domain at a low price and sell it at a price higher than you purchased it. This is similar to real estate investment where you buy and sell the physical property.
The investor purchases land (domain name) and nurtures it, constructs a building (website), and then sells it at a higher price to make a profit.
In fact, domain investments are better than real estate investments. There are:
- No property taxes
- No tenants to deal with
- No termites
However, there are various things to consider when you have just started buying and selling domains for profit.
This step-by-step guide talks about how to start with domain investing and make profits.
6 steps to start buying domains for profit
Domaining isn’t a cakewalk; it takes effort if you want to be successful.
From domain valuation to its pricing, listing, and negotiating to finally closing the deal, a serious domain investor should keep the following strategies in mind.
1. Find an interesting domain name
The best way to start is to invest in the industry that you are familiar with.
Choose the industry or the niche that you have a knack for. A domain name that is easily searchable and brandable is likely to be more in demand, as compared to the one that’s hard to pronounce and lengthy.
A domain registrar tool is the easiest way to hunt for the domain names in your industry by typing in your keywords.
Related: 10 tips for choosing the perfect domain name
2. Check for the domain pricing
Once you have niched down, the next step in buying domains for profit is to look for a domain within your budget.
While many of the new domains are cheaper, the expired or aged domains may be highly priced depending on various factors:
- Domain age: Aged domains have higher credibility and trust among the search engines. Older the domain, the more valuable it becomes.
- Domain name length: A shorter domain name is easy to remember and pronounceable. Thus, it costs more than the longer domain names and is typically more in demand.
- Domain extension: There are more than 250 domain extensions Domain extension .com is usually considered more valuable than the country-specific TLDs such as .in or extensions such as .org and .biz.
In addition to this, it also depends on how much you are willing to spend and hope to earn from your domain. Plus, how much time you will spend on building the value of your domain.
If you have a tight budget, you can invest in a domain extension that is generally less popular but has the potential over time to gain value.
3. Nurture your domain to grab better deal
Would you want to sell a piece of land or a constructed building if you wish to make higher profits? The same goes for domain investing.
An active domain with traffic and content is a more valuable asset than a parked domain on a landing page.
To get a better valuation in the domain selling marketplace, it is also important to ensure that your domain does not face any Google penalties.
Even if you don’t own a brandable domain, you can still sign off a great deal by creating something more attractive than the generic landing page.
Make your pages personal and brandable to give sellers the impression that they are dealing with an individual and not a domain selling corporation.
4. Keep an eye on your domain value
The next move is to find your domain worth.
When you feel it’s the right time to sell off your domain, you can step into the domain selling marketplace. If you have no idea about your domain’s worth, a domain appraisal tool is a nice place to start with.
A domain appraisal service estimates the value of your domain by comparing it with the other similar domain names. The appraisal considers the factors like:
- Domain age
- Whether it includes keywords
- Domain extension
Some domain appraisal tools also help you appraise the domains that you don’t own and request to purchase them by making an offer through a broker service. Alternatively, you can do a WHOIS lookup and send the offer to the owner of the domain yourself.
5. Find your place to sell the domain names
This is the most crucial step in selling your domain. The gist is where would you want to list your domain name to sell. There are various types of domain selling marketplaces where sellers can list their domains.
One way to advertise your domain for sale is to create a landing page template that says ‘This domain is for sale’ and include the contact details and price within (GoDaddy makes this easy).
However, this alone is a less viable method of selling your domains and finding best deals.
Most domain investors list their domains in domain aftermarket or prefer to list them in a domain auction to get a higher bid for their domain.
Or a domain seller can keep a fixed price of their domain where buyers can counter negotiate.
6. Know how domain transfers work
Whether you are buying or selling a domain, you must be well versed in the domain transfer process.
Because domain names are valuable, hackers may try to intercept them during transfer. It is vital that the transfer — to you or to a buyer — be done safely and by trustworthy partners.
It is always safer to transfer your domain through a third-party service that works in tandem with Escrow.
The buyer will receive the rights over the domain after paying the agreed amount to the escrow account. The seller will receive the amount once the domain transfer completes.
Also, make sure to educate yourself on the EPP codes and domain protection. EPP codes work like a key that confirms the domain transfers between the seller and buyer.
Few things to know before domain investing
As you step up into buying and selling domains for profit, don’t get swayed by the success stories that you read on the internet.
While it is easy to begin investing in domains, there are various pitfalls that you would want to avoid.
Domaining is not a quick-rich scheme: It’s true that a premium domain can be as worthy as six figures, but this is not an overnight miracle. Domain investing and nurturing is a hard-fought process and takes a lot of time and effort.
Don’t restrict your research: Most people skimp their research work and make the mistake of replicating what an industry expert or a thought leader has done. You never know where they started from. Consider reading the domain blogs that share insights and updates about domaining and joining domain forums to ask questions.
Don’t consider it just a hobby: Domaining as a hobby might not help you churn the profits that you expect. Even if you are working as a full-time professional, make sure to give a considerable amount of time to domain investing. Make some time for research and investment to get better insights into domaining.
You can buy and sell domains for profit
Domain investing is a lucrative business, but it needs time and nurturing. You need to be familiar with all the nitty-gritty of buying a domain and selling it at a higher price.
If you want to build a solid domain portfolio, you need to keep these strategies in mind and move with a plan of action.
Here’s a quick recap of what you need to know to buy and sell domains for profit:
- Search for domain names that are within your budget and may yield you profits in the future
- Park your domain or build a website on the domain address
- Keep an eye on domain value and list it on the domain auction sites
- Use the domain investing tools to ease efforts
- Initiate the domain transfer using a secure payment service
If you think this is the right time to invest in domains, you can start your domain hunting right away. You will find all you need to invest wisely at GoDaddy, the world’s largest domain name registrar.