Are Domainers selling LLL.coms for pennies on the dollar?

penny

As I mentioned last week, I am thinking about starting to invest in numeric domains next year, so anything related to numeric domains is catching my attention more than it usually does. So a post from Rick Schwartz today really caught my eye, in it he made a clear point – Domainers are selling LLL .COMs for too little:

“3 letter domains are selling for around $25k-37k. Way too cheap!! 1/10 of what the prices should be and probably will be in the not too distant future. LLL.com domains are worth a MINIMUM $100k! Any less is weak. Selling too cheap. A unique asset to fill a unique need of something very specific and you pull your pants down??!! WEAK!” (Source – RicksBlog)

This got me thinking, I wonder if this represents an opportunity? Next year I plan to deploy $50k – $100k into numeric .COMs, at least that’s what I’m thinking now, as I continue to dive deeper into the data this could change, but that’s the plan as it stands right now. If Rick thinks that Domainers are selling LLL .COMs for a fraction of what they are worth, the same is likely true for 4N and 5N .COMs as well.

So could it be that now is one of the best times to buy numeric .COMs from Domainers who have held them for years, are sick of holding them and are ready to just take the money and run?

I agree with Rick, it does seem like Domainers are selling LLL .COMs for too cheap. At the same time, I want to put myself in the shoes of an LLL .COM owner. Supposed I’ve held onto an LLL .COM for 12 years, I originally bought it for $5,000 – I get an offer for $25,000 and think – okay, that’s five times my money and I’ve been hanging onto this name for 12 years, I need to make some money. So it moves onto another Domainer, if they hold it for 5 years and during that time put more time and energy into marketing the name, could they flip it for a 4x profit? Maybe so.

This leads me to a question. If you were going to deploy $50k – $100k into numeric domains, would you buy more names and thus focus on 4N and 5N .COMS, or go for the bigger names and try to pick up 2 – 4 LLL .COMs for $25k each?

What do you think? As usual, I want to hear from you – comment and let your voice be heard!

{ 15 comments… add one }

  • Snoopy September 25, 2018, 11:20 pm

    Who are the endusers for 4 and 5 number .com’s?

    Reply
  • Morgan September 25, 2018, 11:29 pm

    @Snoopy – I’m pretty new to numeric domains but since expired 5N .COMs are selling for five figures on Go Daddy and investors in China seem to be flipping them for a profit…I’d say investors in China right? Numeric domains seem to be liquid in the investor community not the end-user community…as for LLL .COMs, that feels like an end-user play if you’re looking for six-figures.

    Reply
  • Undaunt September 25, 2018, 11:48 pm

    Easy answer.Pick LLL.com .Liquid and you dont have to wait for the chinese for everything.4N is better to pick also but in terms of good investment ,Rick is right and leaving too much on the table.Easy 6 figure investment.

    Reply
  • Matt Holmes September 25, 2018, 11:52 pm

    Why is all of this action happening now? Still sounds scary to me. I always have a big eyebrow raised at the shenanigans at godaddy auctions. Plus, as the buyer, the deal doesn’t always go through, nor as the seller, so who says those numbers are accurate unless you’re checking each one on namebio later.

    Reply
    • Morgan September 26, 2018, 12:20 am

      @Matt – good question, I’ve been wondering the same myself. Also probably a good idea to look at how many of the 5N .COM auctions that sell actually change hands…more research to do!

      Reply
  • Bill Kara September 26, 2018, 12:00 am

    Stick to what you know. This isn’t it.

    No fomo my friend.

    Reply
  • Morgan September 26, 2018, 12:19 am

    @Bill – probably good advice. At the same time, I’m always looking to learn more and see where there might be new opportunities. I do like the idea of investing in domains that are completely liquid…but maybe I’m kidding myself in thinking this is possible?

    What do you think about all the 5N .COMs selling for mid four-figures right now? Feels like there has to be a pretty active market for selling those for a profit…

    Reply
  • Michael September 26, 2018, 2:39 am

    Rick is out of touch, period. I don’t say this as someone who is jealous, I’ve owned 60+ LLL.com over the years, a couple NNN.com, even a few CC.com.

    He says domain investors are selling them for 1/10th of their worth. Duh, that’s just the difference between wholesale pricing and retail pricing. Basically what his “advice” boils down to is don’t ever sell to another domain investor because you can get more selling to an end user. What a revelation. Too bad not everyone got in super early, made a killing on porn, and could sit and wait for the perfect buyer. Most people have to hustle. If he actually believed what he was saying, with his bank roll you would see him winning practically every LLL.com auction today, but you don’t see that.

    If I had only bought and held back in the day, I could have maybe afforded two LLL.com. The odds of me selling any of those in the next decade to the perfect end user is practically zero, theoretically it might not have even happened in my lifetime. But instead I flipped them for 2-5x to other investors, bought more, flipped those, and kept rolling up and out. In the subsequent decade I made hundreds of thousands of dollars doing this. Had I just sat and waited I might still be sitting on those same two LLL.com domains having not made a dollar to reinvest.

    He’s talking from the perspective of someone who built up enough quality inventory early enough, mostly playing with profits and porn/parking money that isn’t around today, that he could just wait on every single domain and still make a great living. Almost nobody except institutional money can do that today. And even if you have the money it doesn’t really make sense… just do the math.

    How many LLL.com would you have to own to sell one for six figures each year? I have it on good authority that the number is more than 250. At an average cost of $25k that’s $6.25 million invested to maybe make $200k a year on average. That’s a 3.2% return, barely above inflation and way below throwing it in an index fund.

    You have to understand that the people buying numerics today are not buying them because they can get 10x returns to end users. It’s a different game than buying at wholesale and waiting for retail and benefiting from the inefficiency in the market. They’re buying them as a store of wealth hoping to flip them to the next fool (domain investor) for 20-30% gains a few years down the road. Also some of it is just money laundering. It isn’t investing, at best it is speculating and at worst it is gambling. It’s like saying you’re “investing” in crypto.

    You’re also more than two years late to this party. There was a great run up in numerics that made a lot of people a lot of money. It was a bubble fueled by greed and FOMO. Then they got cut in half or worse, and now they’re kind of just trending sideways (much like crypto will for a few years). They will definitely not hold up well during the next recession, not relative to LLL.com or words.

    Listen to Bill, just keep doing what you’re doing as it is working for you. Don’t chase BS hype machines, especially not several years after they peak. And don’t listen to Rick, his advice generally only applies to the top 1% that got in two decades ago. The rest of us are playing a different game. Don’t get me wrong, the man is a visionary. He saw value where few else did. He had the nerve to hold out for incredible prices. He worked out some brilliant cash+equity deals. But 95% of that success is predicated on already being in an extremely strong position early on due to a different environment.

    Rick, if you’re reading this… start a separate portfolio with $10k and blog about your progress along the way. See where you stand in two or three years. Then instead of writing people off as haters or idiots when they say your advice isn’t relevant today you’ll understand where they are coming from and can maybe get a fresh perspective. With prices being where they’re at, $10k will maybe get you 5-10 fairly mediocre domains on the drop auctions, which could take 10+ years before you see a single passive sale in the $x,xxx range. It’s pretty bleak out there.

    Reply
  • Tony September 26, 2018, 4:01 am

    “Rick, if you’re reading this… start a separate portfolio with $10k and blog about your progress along the way. See where you stand in two or three years. Then instead of writing people off as haters or idiots when they say your advice isn’t relevant today you’ll understand where they are coming from and can maybe get a fresh perspective. With prices being where they’re at, $10k will maybe get you 5-10 fairly mediocre domains on the drop auctions, which could take 10+ years before you see a single passive sale in the $x,xxx range. It’s pretty bleak out there.”
    —————————————————————————————

    This post was a masterpiece. Much better than the usual speculative drivel by the blog writer of this site. In recent years, Rick has invested way more than your hypothetical $10K into hand reg sprees and junk TLD’s and I’m sure he has taken losses on all those endeavors. The spectacular sales he’s reporting now were all acquired back in the late 90’s.

    Mike Berkens, on the other hand, I have no doubt, would be successful today starting over with $10K. That guy looks like the smartest guy in the room probably because he is most times.

    Reply
    • Michael September 26, 2018, 6:05 am

      “Mike Berkens, on the other hand, I have no doubt, would be successful today starting over with $10K. That guy looks like the smartest guy in the room probably because he is most times.”
      ———————–
      I couldn’t agree with you more, Berkens could absolutely start over today with $10k and do some serious damage. The industry lost a great voice when he semi-retired.

      Rick obviously knows what a good domain is, but that isn’t hard to figure out especially this late in the game, and there’s not much you can do with that knowledge without a huge bankroll. But Berkens can spot good value for the money regardless of the price point, which is a whole different (and much more important) talent, and he’s doing it every day. Him, Schilling, Mann, and a few others of the old guard are still grinding and making smart buys.

      I was thinking, how would I respond if Rick replied “Sure, give me $10k and I’ll spend the time on this blogging experiment you proposed. You get back your initial investment from the sales and we split the profit after that.” Would I do it? Based on what I’ve seen him doing the past 5-10 years it would be a resounding and instant “hell no”. I have no confidence he could do it.

      If Berkens said the same thing to me, he wouldn’t even be able to finish his sentence before I accepted and then apologized for interrupting him. Same for the other guys I mentioned above. These guys kept playing the game and adapted. Rick seems to mostly rely on his (admittedly) brilliant plays from 20 years ago, but guess what… that doesn’t help anyone today.

      Again, no disrespect to Rick. Sharp guy. Just out of touch with what it takes to succeed today. The only advice he can give to anyone is “buy expensive domains, quote high prices and wait” which is applicable to almost nobody.

      And the hero-worship he is on the receiving end of… it’s truly nauseating.

      Reply
  • Kemjo September 26, 2018, 4:16 am

    While I understand some people need cash and 20-25k for a domain is still considerable money,I think Rick is right if ur not shortsighted. Flipping the most valuable domains(like lll.com)is def a regret move in the long run because they are rare and hard to replace.if. u flip the names with the best end user potential then what so u sell to thenemd user for good$?but some people will sell for cash now..with the possible side effect of regret later.

    Reply
  • staff September 26, 2018, 7:02 am

    Sooner or later, once O.com go onto auction and when this occurs the LL-LLL-LLLL domains goes up $ > skyrocket. You missed the point of everything Schwartz just said. Hold and Wait (know what you’re doing) vs Flip and Cry (fly around). But mostly what you see is: pay tax or invest tax $ in domains.

    Reply
  • Xavier Lemay September 26, 2018, 7:14 am

    Stay away from bubbles! A lot of investors have learned their lessons the hard way!

    Reply
  • brand September 26, 2018, 9:08 am

    Folks, this is the third or forth post Morgan has talked about how he’s going to buy Numeric’s and most everyone has said, that ship sailed long ago.
    I’m sure he has done his homework and knows what each of these numbers mean and represent in the Chinese culture, what the strong numbers are and how the pattern of these numbers have meaning.
    I wish him all the best and hope he has fun like many of us did back in 2015.

    Reply
  • Sigma September 27, 2018, 1:06 pm

    @Morgan
    Based on your statements, I’d say you’d be better served using $50K-$100k to purchase 1-2 word dot-com with dictionary or commercial meaning. Maybe take $10K if you can catch a LLL.com on the drop or in a fire-sale.

    Reply

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