How most people get started in the domain investing world

Last week I got an email from a new domain investor. He had started out the same way most of us do – hand-registering a bunch of domain names and assuming they’re all worth thousands or tens of thousands of dollars.

A year has passed and not a single one has sold. What happened here?

In following-up with this new investor I let them know, “you’re not alone, this is how most people start.” Then I moved onto the painful part – “that being said, you’re probably going to want to drop all of these and start fresh.”

Of course there are plenty of ways to try to move a list of random, hand-registered domains, but in practice I’ve found this is rarely worth the time. It’s healthier for you, your bank account, and your domain “investments” if you’re realistic about the fact that you just bought a bunch of junk.

At this stage there are two moves you can make:

  1. Ignore the facts and just “assume” that you’re a genius and all the domains you thought of, that nobody else ever registered after all these years, are incredibly valuable. In which case you move is to hang onto these domains, keep renewing them, and insist that some day they’ll sell and it’s worth the holding cost.
  2. Drop your portfolio and start fresh.

I recommend option #2. There’s always a pretty easy formula you can follow to re-start the right way. Add up the total cost of all your renewals, in the case of this person, that number was around $700.

Take that money and put it into a handful of expired domain names. While you won’t be building your portfolio at a cost of $10/domain, you now have a much better chance of building a portfolio with some domains that actually turn out to be pretty good investments.

In the case of someone like this with $700, I recommended they buy two or three domains, all two-word .COMs. A two-word .COM that you buy for $200 very well could be worth $2,000, or even $3,000 or more. Don’t get too excited, you’re probably not going to sell it for $10,000 – sure it could happen, but it’s very unlikely.

When you’re starting out, shoot for a 3x – 5x ROI to get a few sales under your belt. The lower the price, the bigger the market of available buyers is. So it will be a lot easier to sell that domain you just bought for $200 for $600 that it will be for $2,000. Make sense?

As for how to continue to build and grow your business, there are a lot of resources to help you out with that. Two that I highly recommend are DNAcademy and DomainSherpa, if you start to plug-into both of those, moving forward I think you’ll find yourself going in a much better direction.

There are so many other people out there like this blog reader of mine. You’re all in the same boat, and it’s a boat most of us have been in as well. The question is, can you be honest with yourself and have the cut your losses and start fresh?

Morgan Linton

Morgan Linton