They’re questions that I am trying to ask more often but often miss a few. It’s so easy to get caught up in the buy, the auctions, the deal. We often forget that it’s real money involved. Money that has an opportunity cost and could be used for all different kinds of investment. Here are 10 questions I think should be asked as you buy a domain.
1. Are there better names than this in the same price range for the category you are targeting?
Many of us have niches or categories that we feel more comfortable in. It’s easy to get caught up in an auction or negotiation and go above the price level of comparable or better names.
2. By registering or buying a domain are you acting in bad faith? Bad faith as defined by ICANN “By using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your web site or other on-line location, by creating a likelihood of confusion with the complainant’s mark as to the source, sponsorship, affiliation, or endorsement of your web site or location or of a product or service on your web site or location”
My opinion has always been to try and make money through my own hard work. Registering obvious trademarked names is a lazy person’s way of making money. GetFacebookFriends.com (made up name) sounds like it could be a great name but it is only great because it has one of the most popular website names in the world in the title. Using their popularity to make money for yourself. It’s your decision but make sure it’s a conscious decision when you make it.
3. What’s is your exit strategy from for each domain?
Yeah, “I’m going to sell it, that’s how I’m going to get out” I’ve never put money into a name that I didn’t have some liquidation expectation. I know I can get out of every domain I have. And yes my exit strategy on a few is drop them if I have to financially. I find so many people buy and buy with the one will pay for the rest strategy. Some times it works, some times it doesn’t.
4. Do you have a mentor or a fellow domain investor you can trust to ask questions and bounce things off of? It will serve you well if you do.
5. Are you buying the name only because you feel like buying something? Most domainers are addicted to buying. They scan the auctions looking for names every night and get a rush from the hunt. Be careful. Its easy to get over your head or buy less than quality domains because they seem like a “deal”
6. Is this a domain for resale or for a build out? If you answered build out then what are the REAL chances that you are going to build it out? If it’s not in a niche you are already familiar with the real chance takes a dive. 98% of your domains are resale domains merely from the standpoint that you can only build out so many unless you have staff.
7. Do you have the money or business knowledge to build out the domain you have plans for? I’m going to guess for many the answer is no. Nine times out of ten the answer is no for myself as well. I just wish that would have stopped me from buying a few of the names.
8. What percentage return do you expect from your domain investments? As a whole, not individually? For every domain you sell there are hundreds you haven’t. That sale has to pay for the rest of the group. Is it acceptable? Could you get a better return investing in something else? You should know your returns from your tax filings alone. Wait, you don’t file taxes? Please step over here.
9. What were your investment in domains this year plus or minus dollars? The key to trading and gambling is bankroll management. Do you have a plan of how much you plan to spend on domains this year? Many people I talk to don’t have any idea how much they spent on new domains in the past 12 months. Can you think of many other things that you do with your money that you really don’t know the total of what you spent. My guess would be food and fun and that’s it.
10. Are you addicted to domain investing or are you truly building a portfolio? I fine that most new or unsuccessful domain investor’s portfolio gets bigger but doesn’t get better.