Buying Domain names: Good or bad investment

Last Update: September 23, 2020

I have read a number of posts recently that were centered around purchasing Domain names as an investment.

Because I have been doing this for a number of years now, I thought I'd provide you with a brief anaylysis of how to approach this style of investment.

There are several ways to go about this.

1. Purchasing a domain name and simply sitting on it in the hope its value will increase.

2. Adding a niche to the domain, building a website. Writing content and than when the site starts producing a constant income, placing it on the market for sale.

3. Domain Parking. As per Goddaddy's interpretation.

"Domain parking, aka cash parking, is the leveraging of advertisements on a parked web domain to generate revenue while that domain is otherwise inactive. Similar to affiliate advertising, you make money based on how many users land on your site and click the advertisements".

This system is not an actual website, but rather a Landing Page.

In This Blog I simply want to talk about the First point mentioned above.

This revolves around Buying a Domain name and sitting on it until you are ready to try to sell it for a profit.

Like most potential online money earning possibilities...

This Isn't Easy.

Many people don't understand the concept of buying and selling a domain for profit. Put simply, it is all about Supply and demand.

It's really no different from buying a parcel of property. Buy it in the right location and you stand to make a good profit. Buy it in a bad location and you will rarely make anything.

But, getting back to Supply and Demand, lets say you want to buy a product for resale, It would be foolish not to research the product and find out what sort of demand there is for it. If you buy something that no one wants, no one will buy it.

Purchasing a Domain name for resale requires research, an understanding of what words attract people and a degree of luck.

The research is based around what people who are building a website online are actually looking for, what are the most popular niches. It's very similar to looking for a niche when building a website, you want something that people will want to look at and purchase from.

The words that compose the name of the Domain are of the upmost importance. For example the word 'Free' is always a big seller.

How can you find out what words are popular.

It's simple really. Write a list of possible domain names, place them into a site such as 'Go Daddy' where you can have it evaluated, and push the search button.

When Go Daddy, or whatever other Domain valuer you are using, gives you the estimated value, you will also see a section underneath telling you why its valued the amount given. In this summary section you will also be told if any of the words you used are of value. For Example, It may say that the word 'Free' has increased the value of your Domain name.

By playing around using different words you will be able to eventually compile a list of those that are more valuable than others.

This is called Trial and Error.

Please don't ask me for the list of words that are worth money, I have spent years developing my list.

Domain Extensions.

If you've been at WA for a while now than you will know what a Domain extension is, if you are new , than here is a brief summary.

This is taken from 'Your Dictionary .com"

"The definition of a domain extension is the notation at the end of a web address that specifies an Internet category or a country code. An example of a domain extension which is an Internet category is .com for commercial, . org for organization, . gov for government, . edu for all educational institutions,"

So, as you can see, a domain extension is simply a .com, .net, .org etc., etc., that's placed at the end of a domain name.

What does this have to do with Domain valuations?

In most cases a .com is worth more than a .net, which is worth more the a .org.

However, sometimes we simply can't use a .com because the name is taken, yet the.net is available and still worth a fair bit of money.

Hyphens.

A short flowing domain name with great keywords are always worth the most. But this doesn't mean its not worth purchasing a name that doesn't have all the features you want. For example. Sometimes its worth your while to construct a domain name using a hyphen, if the name you want isn't available.

To make it easier for you to follow me I 'll give you an example of a domain name I purchased about two years ago.

I was after something with the word 'free' and 'stuff' in it, unfortunately the one I was after (freestuff.com), wasn't available. Neither was (freestuff.net). But I added a hyphen to make it (free-stuff.net) and 'Hey Presto' it was available.

This Domain is currently valued over $800. Not as high as some of mine, but still an excellent investment.

You should now have a better understanding of the basics involved when purchasing domain names as an investment.

It's not for the faint-hearted and there is a degree of luck involved. Personally, throw in my 'gut feelings', when making a decision to buy or not to buy.

There is no guarantee you will make lots of money from doing this. It's no different than any other business venture. You must be prepared to undertake heaps of research, and the for disappointments you will experience on the way.

However, I don't know about you, but I love taking chances and I enjoy this type of investment. But I also do my best to minimize the risks involved.

I am constantly amazed by the number of ways available to make an income online. This is just another way.

Remember, if you are willing to learn than anything is possible. You to can find success at wealthy affiliate.

All the best. Jim





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DynamicDavid Premium
Just curious?

Have you actually managed to sell domain names and made a profit doing this?

I have seen some of online tools that value domain names.

However it seems that if you want to sell the domain names, you have to spend money with them in the hope that they will find you a buyer. They may or may not but they still want money for their service. Someone mentioned that these companies that sell domain names in this manner on your behalf charge a monthly recurring cost and if they do sell the domain name, they also want a 20% commission. If this is the case, it seems that there wouldn't be a lot of net profit after all those expenses.

Just really curious how you actually sell these domain names and make your profit.
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JKulk1 Premium
I haven't listed any for sale as yet but I am a member of several auction sites ( for free). Sedo is one.
Currently Mel has several sites listed and I will list some within the next few months.
Yes, they charge a commission , but that's a normal part of running a business.
I do know of one that sold recently for over $3000 on Sedo. They have a staggered commission rate. I believe it's 10% for a 3000 sale. So that would be $300 .
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DynamicDavid Premium
Sounds good.

I heard that a few years ago, Tesla dot com went for $12 million and Zoom dot com went for $2 million. I always wondered did the original owners actually got the lions share of those proceeds or did a number of middlemen (or women) get most of those proceeds.

Not much point in spending time, money and effort in having assets that you don't get the benefit at the end of the day.
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Joezout Premium
There are a lot of opinions about this Jim, frankly as far as I'm concerned is a business like any other business, you are making an investment and hoping for a good return. Without question you have done your research and I hope anyone else undertaking this venture does it as well, this is not the type of business plan I am interested in, I know Jeff Brown like yourself is and more power to you guys. While you work on WA you also can handle this quite easily, and I can see it can be quite profitable at times.

Joe
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JKulk1 Premium
Thanks Joe
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EdwinBernard Premium
Hi Jim,

Intriguing post. When you check out a prospective domain name on Go Daddy for its value do you have to pay that amount to buy it?

What if you find a potential domain name that is valued at $1000. Can you buy that domain name on Wealthy Affiliate for $13.99 and sit on a hefty potential profit?

Just curious.

Edwin
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JKulk1 Premium
You can still purchase it at the normal price. The valuation provided simply gives you an idea of what the site might reach at resale.
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zydegeaux Premium
If I was going to buy a name just to sit on I would buy it from Namecheap for $6.99
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JKulk1 Premium
You could, but I like the fact I can have much of my online business based with one business.
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zydegeaux Premium
To make money you either have to know what you're doing or be lucky. When I look for a name to use the first one I think of is always taken so I play around with similar names....I haven't been checking them for value but by blind luck I have stumbled on a few that do have some worth.
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JKulk1 Premium
That's it in a nutshell Neil. Jim
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Aussiemuso Premium
What a great post Jim. I've noticed the community blog on buying domain names and wondered if it was worth a look.
Maybe later once my own websites are profitable. You did make me consider about selling one of them down the track.
Clear and concise information, thanks.

Lily 😁🎶
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JKulk1 Premium
Thanks Lily
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