Two paths – big portfolio vs. small portfolio

I read an interesting article this week on DomainInvesting.com with Elliot’s thought on investing in hundreds of domain names vs. thousands of names. I think most people know Elliot, and know he has some very solid names – he’s focused on quality over quantity.

However that’s just one of two paths, other investors like Mike Mann have large portfolios and make (and report) the huge volume of sales they end up making. It makes sense right? More domains, more sales, but each of these models requires a different strategy and focus.

Right now Elliot’s portfolio has about 500 domains in it but there was a time when he thought about building up a portfolio of 25,000+ names:

“Buying thousands of domain names proved to be much more difficult than the model that has worked well for 10+ years. To alter my strategy, I would need to be somewhat less discriminating about the domain name I purchase. I would need to be more active in auctions and target far more domain names. I found that this was a major challenge as many names I thought I could buy for under $100 were selling for much more at auction. It was taking a great deal of time to find good values. At the rate I was going, bidding on auctions was not going to get me to 25k domain names very quickly and it would be very expensive.” (Elliot Silver)

Like Elliot, I also have a portfolio of around 500 domains, and have thought about what it would be like to have thousands or tens of thousands. I have very similar feelings to Elliot and really just acknowledge that it’s a whole different game.

What do you think? Are you going for a thousand or ten-thousand name portfolio or focusing on a smaller portfolio with bigger names? Do you think one path is better than another?

Comment and let your voice be heard!

{ 10 comments… add one }

  • Ian Ingram May 18, 2017, 11:02 pm

    If you can consistently find great deals, capitalize on them, and you have the knowledge and track record to do so, you should buy as many domains as possible (given your risk tolerance).

    Obviously, don’t put your family on the streets and understand that the market can change.

    If those boxes are checked, the question starts to morph into something more like:

    How many silver dollars would you buy for one penny each?

    All of them, of course.

    The problem as Elliot pointed out, is that it’s getting increasingly hard to find those great deals and many are turning silver dollars into pennies, or nothing at all.

    Reply
  • Suresh Raghavan May 19, 2017, 7:13 am

    This is a good question and the key factor is whether your business can sustain the renewal fees. I have come to believe that you can’t get ahead by holding even average to good names of that volume (1000’s) . Unless you are an exceptional salesman and constantly selling or you have exceptional domains where people are knocking on your door.

    To stay ahead off the game and not constantly trying to stay afloat, you really have to own (Super Premium or Premium) domains, which would be a Top 10,000 keyword domain. In the last decade and in the last few years have made a strategic shift to better domains (more 1 word cctlds than 2 word .com), it made sense for me to invest in a growing cctld with premium domains. My total domains has been relatively the same but the quality of the domains are better.

    Find a strategy that fits your individual personality and what your business requires

    Reply
    • Alvin Brown May 19, 2017, 7:54 am

      Yes, you must solve the renewal aspect. Carrying cost of ~700+ domains, I personally solve it with a number of micro-niche sites developed to cover my annual renewal fees so that I can sit and wait for the 10-15 year. There are the 5-6 sales a year that happen without outbound sales effort. Most of those domains I decide to sale are because qualified customers come knocking and the likelihood that I’ll dev is slim.

      Reply
  • JZ May 19, 2017, 7:55 am

    i went the big route simply because i didn’t have funds to buy awesome domains at first. funnily enough i sell more and get more offers on domains i bought for 10-20 bucks than ones i paid thousands for.

    Reply
  • Joe May 19, 2017, 8:45 am

    Depends on what you focus. I’d rather have one good, generic .com domain than a hundred million of the “best” new gtlds.

    Reply
  • Eric Lyon May 19, 2017, 11:50 am

    I prefer a small portfolio with everything developed and structured into 2 different network types; Public and Private. My public network is used for some general market testing of services, products, etc. and a few standard business models in niches everyone already knows about. My private network is used for other testing strategies and niches I don’t want anyone else to know about, yet.

    Reply
  • Eric Borgos May 19, 2017, 6:59 pm

    For 10 years I had around 9000 domains. That made sense back in the days domain parking paid for the renewal fees. But, then my parking income went down by 90%, so I tried to develop mini-sites on them. That did not go well, so eventually I sold all but 400 domains (1/2 of which I am using for real sites). Also, I never had to deal with a UDRP, but I did get several threats, so that always worried me. Having less domains makes life easier, so at this point if I were starting fresh, I would rather have a few big domains than a bunch of small ones.

    Reply
  • Mark Thorpe May 19, 2017, 7:07 pm

    I try to keep my portfolio under 1,000 names. I have not bought many domains since last fall. Expired domain aftermarket and drops are overpriced. IMO
    I have been buying domains privately lately or domains not on most peoples radar.

    Reply
  • Braden Pollock May 20, 2017, 7:33 am

    The big portfolio owners e.g. Frank Shilling, Mike Mann/Domain Market, Huge Domains, etc are acquiring drops via automation. Bidding by hand won’t get you to scale fast enough before drowning in renewal fees, not to mention being unsustainable. Besides, you’ll lose out to the scripts that are outbidding you. That said, many of the large portfolios have a high asset value yet very low (or negative) cash-flow. This is one of the reasons why we’ve seen many portfolio sales of late. I think owning 10k-15k names (as I’ve done in the past) doesn’t scale. I would guess that you’ll need to have 50K names to have enough sale volume to make it worth-while. At that point, you’ll probably need staff to assist with the number of inquiries and follow-up sales calls.
    I’m now down to a portfolio of ~5000 names with all the action being in the top 5% of the names. Less work, fewer sales yet higher sales prices.

    Reply
    • Morgan May 22, 2017, 7:04 pm

      @Braden – great points, thanks for sharing!

      Reply

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