I recently read an article from Acro over at DomainGang about a guy that took a loss on a domain AKME.com. Long story short, the guy buys it on NameJet for $676 and then sends it to auction on Sedo 30 days later and only ends up getting $419. A loss of $307. Acro thinks it was a stupid move and provides this quote. ” Pretty impressive lesson to be learned here: Flipping domains is the single biggest mistake you can make.”
I think this is wrong. If you are domaining, there are often times that you can flip. Where you bought will often determine your ability to flip a name. If your price is on the upper end of value then you’ll need to hold. If you got a solid deal then you can look to sell on the upper end. The 4L.com craze was a great time to make instant money flipping. Right now CVCV and 5Ls offer great opportunity. I’m not going to disagree with Acro in saying that if someone holds they have a better chance of making money, I’m disagreeing with the saying you can’t make money flipping. The goal is to sell more than you spend on your portfolio …….short term and long term
Notice how I didn’t say on each name? There are some names that you make a killing on. Enough money to make up for a the other “mistakes” that you’ve purchased. Everyone who is successful in this industry have had those sales. There are more zeros at the end for some domainers but it is all relative. Does that mean you make money on every sale? Absolutely not. We all have had those “mobi” purchases that were horrible buys. You only hope that you can get something out of the domain before everyone else realizes how bad it is. All you need is one person to think it’s still worth something. The other part of the portfolio are those names that we hold and sit. Waiting for offers or the time when we pull them out, dust them off, and push them a little. Perhaps putting them up for auction
This is where Acro and I don’t see eye to eye. Auctions are a great way to generate cash flow and all but the most wealthy domainers need cash flow. There simply isn’t enough money in the kitty to buy all the names we want. Every once in a while we roll the dice and put a name in an auction with a reserve less than what we paid. The hope is that the name is strong enough and draws enough bids to push it past the profit line. Names that have a lot of bids draw more attention. It usually puts it to the top of “hot” names. To get more bids we start with a lower reserve and a lower price. The word “hope” comes in here. Yes this blows up in my face some times. I have lost several hundred dollars and many names but the positive it’s only a few hundred dollars. If a name gets hot, I can have a name that I paid $60 end up at $1500. If this happens, I conceivably could have 7 auctions lose $200 and I’d still be even.
The key to all this is knowing when to take the risk and when not to. There are times I am willing to sell domains at a loss to raise enough cash for a domain that I think is worth much much more and can flip for a huge profit. In trading, poker, business, and domaining it’s all about money management. It is easy to rip someone for taking a loss when you look in hindsight. They guy that bought AKME guessed wrong, plain and simple. Sure he could have waited a few years and be guaranteed profit but he thought he could make some now. He thought he could sell the name for more and was willing to risk $400 to find out if he was right. I’m sure it was a lesson learned and next time he will have more information in which to make another decision. And maybe next time he makes a few thousand and instead of getting blasted at DomainGang he can be made a hero by Fusible.