How I Make Money in Domain Investing: Part 2

Aug 05 2012

Yesterday I wrote part one of how I make money investing in domains and it seemed to go over pretty well but there were a few more questions that were asked and I thought I would take them a few at a time

Q. You keep talking about “liquid” domains in your post. What are liquid domains and which ones would you consider the most liquid?

This is the part of buying and selling that most new domain investors just don’t get. Anyone can buy a domain, some can sell, and even less sell consistently for an overall profit. Everyone starts out the same. They don’t have a very large bankroll or even if they do, they buy less than quality names. Then they sit and wait for offers to come in. They don’t. So then they starting looking for buyers. The try to mail what they think are end users. No response. Then the hit the forums, spam the comment sections of blogs, or email random people in the industry with “I think this name may be on interest to you because ” . Some times it works, some times it doesn’t. If you have 10,000 names you can most likely keep up the cash flow to build your portfolio by waiting for offers. With 500 you probably can’t. In my opinion it is best to start out by having at least a few names that are liquid. Domains you know you can sell to another domineer or put up at Godaddy and at worse get your money back or close. You should be able to tell what those are if you look at the auctions each day.

3 Character dot coms
LLL do nets and dot orgs
(notice how I didn’t include 5L.coms, too many junky names available)

These range in price from $50 up. This group contains a price range for everyone and they ALWAYS sell. They may not sell for more than you paid but they will sell which is more than I can say for many domains. The discussion of whether they are better than generic dot coms is irrelevant. I want domains that trade similar to stock. That have a minimum underlying value in the minds of other domain investors. In good times they go up, others down, but regardless they will sell. Yes, you are most likely selling to other domain investors with these names, but again I don’t care who I’m selling to. As long as I sell it for more than I paid, I don’t care if its a 65 year old woman from Omaha or a guy that owns 5000 domains. As long as I can sell it for a profit, I’ll be happy. Let the guys standing on the sideline tell you that you could have sold it for more or that the guy that bought it is going to sell it for $10,000 more than you. Good for them. I’ll take my profit and move on. I always want to sell a domain for maximum profit but there is a thing called time value of money that people completely forget. was a nice name. One of my favorites. I sold it for only $1000 profit. I took the $4K, added another $4K from other sales and bought a short name. I then sold than 45 days later and doubled my money. So while I only made $1K on sello, the sale of that name really led to $9K in profit. Could I have held on to it and made $5K more of profit from it down the road? Maybe, but who knows how long I would have waited. I now have my profits in hand ready to buy the next domain.

Liquidity is the core of every market. Unless it is a product that you are going to actually use, there is no reason to buy something for resale without liquidity. Some domains have more liquidity than others. I probably know the value of the liquid domains above as well as anyone in the market simply by doing my daily list every single day and seeing the results. I also am reminded every time I get a chance at a portfolio that’s for sale and the same domains are always picked off by the time I see it (I’m low on the totem pole so I usually see it last). It’s always the names above.

Again, this is only my angle of domain investing. It’s not right or wrong but it works for me so actually it can’t be wrong. Generic domains are incredibly valuable and I think they will continue to grow in value but their pricing is less consistent and it is very easy to overpay. Many instances I have absolutely no idea how much a generic will sell for at auction. Like all domain investors I try and guess and I’m always wrong. Usually very wrong. The short names have a much tighter range and for me, the value that’s in my head is usually much closer to final auctions results or DnJournal’s sales prices. It doesn’t mean I don’t buy generics. I do every day. But just like my short, liquid names, I try and keep them in a niche I know or getting to know. If its not its a name that is obvious to all that its a good name. A name like (leased to a mobile marketing company). I knew it was a decent name so it wasn’t a big risk. As my bankroll builds I’ll be able to invest in more valuable generics and sit on them and wait.  I hope to have enough bankroll to continue my flipping AND hold generics.  I’m not there yet but I’m working every day trying to get there.

Tomorrow Post:  How many hours each day do I work to achieve my results?

Please feel free to email me more questions that you want answered in this series and maybe I’ll share

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Outsmarting the Dumb, Outworking the Smart

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  1. Michal

    Hello & thanks for posting this 2-parter. Your sincerity & honesty are greatly appreciated & from an outsiders point of view it allows me to see how a business-person such as yourself really thinks/feels. You seem very down-to-earth & I hope this will lead you to future successes.

    I am looking forward to the next part!

  2. Chet

    Nice job, Shane.

    I could never get myself to pull the trigger on short domains as I could not see the value in meaningless strings. I know I should have bought in, but I did not.

    I’m that generic domain guy with lots of long-tails as well. I try to get the PPC clicks in strong measure so I can wait on buyers without needing to sell.

    So many ways to scale the domain mountain. 🙂

  3. savio dsilva

    Thanks for sharing the detailed reply about LIQUID domains. I would call them HOT domains but LIQUID seems preferable.

    Best wishes for your future posts on these topics.

    Like the old adage goes “Give People What They Want and Then You Get What You Want”.

  4. Paul Mc

    Like the previous comments Shane, many many thanks for sharing the inner workings of your domain investing mindset. For me, these are incredibly useful insights and guidelines.
    In relation to liquidity – now or in the future – do or have any place here? e.g. or In your view.
    Thanks very much Shane and hope you have a great and fun day.

  5. todd

    Hi Shane,

    another very informative post. Quick question, if Namejet is your best platform to sell your names what would be the next best option for the rest of us? I read some of Elliots blog archives and he used to use Snapnames but was wondering if that actually works now. I read in your archives that you use to use Bido and is that still a good platform?

    I also see names listed in GD auctions daily auction lists that private domain owners shill bid on and was curious if that process works. You know the ones that you always see that have one bid on them so they can be seen on the daily list. I know they say shill bidding is wrong but it seems to be normal practice in todays business model.

    I have also noticed lots of names on GD auctions that are selling for very high prices that I was buying a year ago for 20 bucks and was curious if you think since the sale of Godaddy to the new buyers if you think they are practicing shill bidding internally to increase profits. I know I am not the only one seeing these crazy prices and would love to hear comments from the other readers as well.


  6. Mary

    This is a very informative post, one can learn a lot from it, but I also think that one can learn a lot from other people’s mistakes.

    If you make a follow up post maybe you could mention some mistake you have made in the past, like buying X domain and not being able to sell it for what you expected.

    Thanks for sharing Shane.

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