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.