One of the things I’ve always found interesting about the domain investing world is that people often focus on their wins, the names they sell, and ignore all the garbage they drop. The reality is that all of us, even big investors and small, drop domains all the time, it’s a reality but one that isn’t discussed as much as the sales. Of course this makes sense since it’s a lot more exciting to sell a domain name for big money than to drop hundreds or thousands of dollars in domains.
What differs between investors is the criteria they use to determine which domains they drop when a renewal comes around. Some investors have detailed heuristics they use, others just go with their gut. I’ve used a relatively simple formula over the years and can tell you that I’m still learning every year so it’s definitely far from perfect.
Here’s what I look at:
First I only look at dropping names I’ve paid less than $100 for, that’s just me, other people may have a higher or lower number. Next I look at the number of inbound offers, if I’m not seeing at least one real offer a quarter, I usually drop the name. Sometimes before I drop a name I’ll reach-out to 2-3 potential buyers and see if they want to buy it for a few hundred dollars. This at least gives me the opportunity to make a profit and in some cases double or triple my investment on names that I would otherwise drop.
At the end of the day I want to have a portfolio full of names that I have paid a pretty penny for and know are valuable, or I’ve paid less than $100 for and I’ve seen are valuable (or at least think are) based on the inbounds I’m getting. Of course everyone has a different time horizon and I don’t need to sell all of my names or even 10% of them this year to be satisfied. What I do look for is making sure I’m seeing real value from my investments which means making more money off of my domains than I put in, and beating what I could have made if I threw my money in the stock market or real estate.
As I’ve said many times before, even though I’ve been investing in domain names for close to ten years I definitely don’t consider myself an expert. I’ve never done this full time and I don’t plan to. So don’t take my heuristic above as a rule I think you or anyone else should follow, I just wanted to share my own strategy with you since I think it’s never fair to ask a question unless you’re willing to answer it yourself.
So now it’s your turn. How do you decide which domains you want to drop? Comment and let your voice be heard!