Most domain investors start out with fairly mediocre portfolios. It’s okay, nothing to be ashamed of and we all (or most of us) started with portfolios of domains that sounded so good at the time but as we learn more don’t sound so good any more. The key to building a better portfolio really involves two very simple steps:
- Drop garbage names – I don’t mean to be blunt but let’s just cut to the chase. Some of the domains in your portfolio are garbage, dump them like garbage but keep track of how much money you’re saving on renewals, this is important.
- Reinvest your profits – every time you sell a domain you should be taking a fixed percentage of your profit and spending this on even better domains.
Step one is the hardest step and many new investors quit before they get past it. If your whole portfolio is junk it’s better to realize that early, drop almost everything, and then take the money you’re saving on renewals to start with a few solid names. Here’s an example:
Let’s suppose you have 300 domains. You’re not making many sales and don’t understand why nobody wants to buy your domains. Take a deeper look, are they really as good as you think they are? Chance are there’s a lot of garbage in there. So let’s say you keep your top 50 and drop the other 250. You have now saved around $2,500 in renewal fees.
Take that $2,500 and buy five names for $500 each, you now have a stronger portfolio and the money you saved renewing junk went-into buying real assets for your business.
Once you’ve done step one, it’s time to move-onto step two. Now that you have better domains you should finally see some sales coming your way. Of course this doesn’t mean that you can buy a bunch of names for $500 and suddenly the money starts rolling in. Selling domains is an art onto itself but with better names better deals will come your way.
So let’s suppose that you sell one of your domains for $4,000. Now pick a percentage you want to re-invest, say 25%. Now take that $1,000 and buy one domain with it, take the other $3,000 and put it in the bank. Now you have turned a $500 investment into an $1,000 domain and money in the bank. Rinse, repeat, and know that selling domains is hard work and even with $1,000 or $5,000 names, it still takes a lot of work to sell your names to the right buyer.
The idea here is simple, improve your portfolio over time by getting rid of junk and taking the money you save, along with a percentage of your profits and using this to buy better names. Remember, the hardest thing to do is admit that some of your precious domains are junk, but at the end of the day the sooner you can do it, the sooner you can start really building the portfolio you want.