Advice for new domain investors – your first $10k in profit should come from two-word .COMs

Domain Investing Profit

This week I had a blast on the Digital Fortune podcast hosted by Josh Reason. On of the topics I covered is where new domain investors should start and why, even though I’m a big fan of domain extensions like .IO, I think .COM is where 100% of your money should go in the beginning.

All of this ties back to a general concept that I certainly didn’t invent but I did and still do follow – play with profits. The idea here is that with an investment vehicle like domain names, you’ll want to get into a position where you’ve already made back what you put in, and all new domains you’re buying are coming out of profit, i.e. you’re not putting any of your hard earned cash back in.

Obviously to get to this point you have to sell domains at a profit. Sounds simple enough right? Well as many new investors quickly learn, it’s not. As I’ve said many, many, many times before, domain investing is not a great way to make money quickly, it’s not a “get rich quick scheme” and it’s probably not as cool 😎 as you think it is. Sorry to be the bearer of bad news but it’s the truth.

Domains Investing has a steep learning curve and it’s easy to make mistakes that leave you with a portfolio full of liabilities, not assets. The #1 mistake new domain investors make is building a portfolio of hand registered domains. While you can, and likely will make money by selling some hand regs at some point along your domain investing journey, it’s probably not going to be a great path to start with.

Instead, and like I said on the podcast with Josh – I encourage new domain investors to stay laser focused on buying two-word .COMs that are expiring, and focusing on domains in the $250 – $750 range that could sell for $2,500 – $7,500. While you will hear me talk about .IO quite a bit because I’m a big fan of this extension and have sold my fair share of .IO domains, I don’t think it’s a good extension to start with.

Your goal as a new investor (or at least my two cents) should be to generate $10,000 in profit, not revenue but profit. So if you start with 50 domains at an average purchase price of $500, you’ll want to make $35,000 to book your first $10k in profit. On that note, I also don’t recommend domain investing to anyone who is short on cash, needs to make money quickly, or is planning on using the money they make from domain investing to provide for core things in their life anytime soon.

I usually tell people. If you want to get into the domain investing space, be prepared to spend $25,000 to get started, learn the ropes, make some mistakes, and see if it works for you. While you can certainly get started with a few thousand dollars, it’s likely going to take a lot longer to get to your first $10k in profit, which I do think is a real inflection point.

Once you have $10k in profit, then you can start exploring ancillary extensions like .IO and .CO, or really go wild and dip your toes in the .GG or .VC market, but until then, stay focused on two-word .COMs.

{ 6 comments… add one }

  • Emeka October 31, 2020, 8:47 am

    I wouldn’t suggest. Gg or .vc to a new domainer.Focus on .com ,leave the .gg .vc or .whatever to those who can take the risk and spend more to register or purchase. It cost more to renew.

    Stay on .com or .org (if you know what you are doing).From my experience,.com puts you at an advantage when negotiating.

    JMHO

    Reply
  • Dk October 31, 2020, 12:00 pm

    Absolutely, be ready to spend. I spent on average close to 30k per year for about 4-5 years, before i made my first year of profit. Last year and this year i have been in profit, but it took a long time to get there. Now i invest only from profit, but it took long time to get there even when i was willing to invest good $.

    Reply
  • Alan Dodd November 1, 2020, 11:37 am

    The problem with buying at $250-$750 is your precluding the ability to profitably sell at $200-500 – a price range where there is a huge volume of sales. With regards to price elasticity of domains, they are very price sensitive. There’s a formula for that somewhere 😀

    Reply
  • Marek November 1, 2020, 9:48 pm

    In my opinion, new investors should get really familiar with all domain names, not only .com – in .com competition is now enormous, and 99% of people are losing money. How will they make money if they bid or buy the same domain names as experienced .com investors? They will lose money in most cases under such circumstances.

    A more safe route as I see it is to learn slowly about new gTLDs – they are still very underestimated in the domain investing community, while they can fetch very nice prices as businesses are starting to using them at an accelerated rate.

    If you want to have average results, do what everyone is doing. If you want to have unique results, learn something new 🙂 Imo.

    Reply
  • Dk November 3, 2020, 3:29 pm

    If i was starting now…. I think most important part if motivation. You either love domains or you dont. If you dont, doesnt matter how much you invest, you will lose focus and passion in 6 month and you will probably have wasted time and money. I dont think most people can be good till they spent at least a year in domain space, it is not quick game. If you trying to do flips, thats difference. But all in all, i think best chance is having passion for it or you will go bust. Money motivation is not enough.

    Reply
    • Emeka November 3, 2020, 5:36 pm

      I agree with you DK.Money motivation make most newbies not read to know more.They dont even have a passion for it.I learnt and read a lot and the opportunities abound.I enjoy domain investing and take my time to read and research before spending my money.I dont buy to hold for one year like most expect.I buy and invest to know there is an enduser that will need it for their business.Recently closed a $15k sale through afternic broker on a $13 purchase plus a year renewal.Turned down $10k first offer and he worked his magic to get me $15k,so kudos to afternic broker for that.
      Have a passion in it and the rewards will come .If a newbie sees a new gtld sell for $5k , they all rush in and start spending $30 each to purchase what they have not researched on,then drop after on year.No patience as they forget Rome was not built in a day.

      Reply

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