I get a lot of questions from new Domainers about what Domain Names I am currently buying. The answer to this question has changed over the years as I’ve learned more about what works for me and what doesn’t. Of course I’ve also had the opportunity to get incredible advice from some of the top Domainers in the industry so this also has helped steer me in the right direction.
I’ll keep this short and sweet as my current methodology is fairly cut and dry, almost like a science. I follow a formula now whereas in 2007 and 2008 I was much more focused on experimenting, now the experiments have been conducted, the experts have been polled…I know what works, or at least what has worked for Domainers making the kind of money I want to make in this industry. I also know what has worked for my own business and what has failed miserably, every day I hope for another failure because I learn the most from these.
I break down my domain purchases into three categories. If you aren’t doing this it’s probably very hard to stay focused or build a cohesive strategy. Any strategy you devise should be based on past successes, or if not your own then the successes of someone else. This is why someone would spend over $100,000 to have lunch with Warren Buffet, Bill Gates, or Steve Jobs – they all have achieved incredible success and have valuable insight to share. In the development and monetization space my experience with SEO and development really helped me create a successful model. In the sales space I am still learning and basing my strategy off of advice given to me by some of the most successful Domainers on the planet.
It is absolutely critical that you have expectations for every domain that you buy. However expectations along are not enough – you need to have good solid data on why your expectations would be true, it can’t just be a wild guess. By breaking your purchases into categories you can set realistic expectations for yourself from the very beginning. So here’s what I’m buying in each category and why:
Domains for Development
About 75% of the domains I buy are for development. I don’t buy hundreds of domains each month but I do buy between 20-30 for our development portfolio since there are so many opportunities at the moment. I buy my domains either by hand-registering through Go Daddy or Moniker, or buying expired names which I do almost exclusively with Snapnames.
I am looking for domains in categories and with keywords that I have been successful with over the last three years. I only buy in markets that I know and have strong affiliate or lead generation options. If you have to ask yourself, “How would I make money with this domain?” then it’s not a great development candidate. I focus on credit, debt, finance, law, government, and taxes. While I have developed domains in many other niches these are the proven winners.
I also try to look for exact-match search volume below 5,000 and a CPC above $5.00. This has nothing to do with PPC but instead I want to understand how much competition I’m going to have and how much people are willing to pay for a lead. I pick a search volume below 5,000 because these are hot niches but they aren’t wildly competitive. This is why I don’t develop many generics – ranking well for a term with 300,000 exact-match searches requires major SEO and link-building. When you buy domains with an exact-match search below 5,000 there’s a good chance you can get on the first page of Google or Bing within the first few months.
As for TLDs that I’m buying, for development I focus on .com, .net, .org, .info, and .us. I definitely buy more .us than anything else. Why? That’s an easy question to answer – I’ve made the most money and ranked the quickest with .us domains. This is my experience, it’s always worked for me and I can usually buy a .us name for under $5.
Domains for Resale Now
While domain sales is not a major part of my business it is a growing component. I’ve sold a few thousand dollars in domains over the last few months and it’s definitely an area I’ve been putting much more focus on this year. Much of my strategy in this space comes from expert Domainer buddies of mine who have made millions buying and selling domains. These are the people that have done it and in my opinion the best people to learn from.
For immediate resale I buy only .com. I used to buy .net and .org and .us but have learned this year that the vast majority of Domainers want to buy .com domains. They will always command the highest price and if the corresponding .net or .org sold for a pretty penny you have a good idea what your domain could sell for.
I don’t just buy any .com name. Right now I focus almost exclusively on product domains. Why? This is one of the hottest areas that investors are buying in right now. If you look at the domain sales lists and auction results it is clear that product domains are hotter than they’ve ever been. Like I’ve been saying this whole post – I want to focus on what works.
As we all know the sales market has been tough this year which is another key reason why you need to be focusing on the most active patches. My budget for buying domains for resale is usually between $500 – $2000 and I buy pretty much everything from Snapnames. For domains I’d like to resale this year I look for names that are at least a few years old with as high exact-match search volume and CPC as I can find.
Right now I don’t have any incredible five-figure sales to speak of, this is a new path for me and I’m hoping to share my successes with all of you over the next year!
Domains for Resale 3-5 Years From Now
Some domains in my portfolio are long-term investments. I know we’d all like to think our portfolios are 100% liquid but if you’re taking some risks and trying-out new markets then you really aren’t 100% liquid. About 25% of my portfolio consists of domains that I consider to be excellent long-term investments. Most of these are ccTLDs that I think have huge potential, just not this year or next year.
Just like stock market investors make short and long-term investments Domainers should too. Just because sales and interest is low in a particular space doesn’t mean that there won’t be opportunities in the future. It just means you have to understand the market and how it’s trending. A good example here is India. Right now India has one of the fastest-growing economies in the world, it will soon have more Internet users than anywhere in the world and that’s why I believe .in and .co.in have incredible potential.
Long-term investments are definitely the riskiest purchases you’ll make which is why these only represent 25% of my portfolio and are all names I’ve bought for under $500. I’ve tried to focus on domain names that make sense with the given TLD, I wouldn’t buy a US city in the .mx extension, however I do own some great highly searched Spanish words in .mx. This is the same reason I own CricketGames.co.in, cricket is one of if not the most popular sports in India.
I have also talked to major Domain investors about long-term investments and their advice has been to buy the best. Focus on getting strong one-word and two-word domains in these speculative spaces. You don’t want to have a second-rate domain here, you should be buying the best. The TLDs I focus on most for long-term investements are .in, .co.in, .mx, .de, .fm, and .tv.
There – I’ve spilled the beans, now it’s your turn, what are you buying and why? If you’re another blogger reading this feel free to follow-up with a similar post, this would be a great topic to share and compare with each other. Remember, there’s no right or wrong here, it’s all about what makes money!