There’s Only One Thing You Should Follow When Investing in Domain Names

If you are a domain name investor, a domain name flipper, a domain name broker, a domain name speculator; basically anyone who buys a domain name for the purpose of achieving a profit there’s a good chance that you are investing incorrectly and/or running your game plan incorrectly and hurting your potential profits.  I had a conversation via email with someone and I think the problem that he was having is a problem that I’d guess many people have and don’t even realize.  I know when I first started buying domain names I had this problem too but soon realized the problem and corrected it for myself so it didn’t impact me for too long.  The problem is that you are a follower.  You are listening to other people.  Instead of following the only thing you really should be following…  the list of recent sales.  Let me explain.

There’s a good number of people who talk about domain name investing, domain name strategy, domain name profiting online.  Some of them are very successful.  Others not so much.  But when you are investing in domain names you should listen to NONE OF THEM!

“But why shouldn’t we listen to successful domain investors?”

You have different classes of domain investors and they use different strategies.  What works for one person may not work for another person.

The Original Gangsta’s

These guys got ahead of the curve and bought domain names in the beginning.  They are patient with domain names because they can afford to be because they already cashed out on some, made seven figures (or more), and won’t take $10 today if they think they can sit and get $100 tomorrow.   Their advice is to be patient.  Ask for a high figure when someone inquires about your domain.  Wait for that right end user to come along (which can take years).  This works for them but it probably won’t work for you because you’re not a millionaire already.

The Self Proclaimed Gurus

These guys act like they know everything and are out there selling domains every day, in fact odds are they are sitting in the basement of their parents house at 40 years old wondering why their wonderful thoughts of domaining never work for them.  They love to go onto forums and give their “appraisals” when you ask for them, and you take those appraisals to heart and make decisions with your money based on clueless opinions. You are just as guilty as they are, they provide their “expert” opinions and you believe them.  Shame on you both.  And shame on me because I learned this lesson the hard way when I first got into domain name investing.  There was a “highly respected” (I use that term sarcastically now) domain investor on a forum who gave his opinion on a domain name’s value.  Based on his opinion I bought that domain name for a couple grand because he said it was worth at least five times that.  When I wasn’t able to sell the domain I asked him if he wanted to buy it (after all he said it was worth five times that).  Guess what, he didn’t want to buy it.  Guess what, his appraisal was full of shit just like he was.  Lesson learned.

The Churn and Burners

This group will hand register a domain for $10 and try to sell it to someone for $50.  They don’t know anything about value, quality, or true investing.  They are out there making a living by churning through domains daily (if possible).  I’m not knocking them, you can make a living doing this, a $100 a day in profit is $36k/year which you can live off of.   But these guys are just looking for high turnover.  I wouldn’t consider them flippers, they are churn and burn to me.  Many an optimistic new domainer has registered 100 domains and quickly attempt to sell them for a few bucks profit each.  Many an optimistic new domainer got stuck with 100 domains and quit domaining without ever selling a thing.

The Flippers

These guys are looking to buy domains and sell them for a few times what they paid.  Spend $1,000 on a domain and sell it for $3,000.  This takes more patience and knowledge than being a churn and burner because your investment is more than a nominal $10 per domain.  These guys have a good feel for what they can flip for a profit in a reasonable amount of time.  I fall into this category for the most part.  But being successful in flipping domains isn’t something you pick up in a day.  It is something you learn in time.

Just because Usain Bolt wears Brand X Model Y Size Z sneakers and eats Wheaties every day for breakfast does not mean you will start winning races if you follow what he does.  He is in a different place than you are.  Get it?

There is something (not someone) that you should be following though.  This will help any type of domain investor become more successful.  What you should be following is the list of recent domain name sales.  Here’s a great resource that lists out recent domain names sales.  Anyone with a half functioning brain knows that an asset is only worth what someone else is willing to pay for it.  Forget appraisals, if they say your domain is worth $1 Million but you can only find buyers who will spend $100 on your domain than guess what… your domain is worth $100.  See what types of domains are selling, what prices they are selling for, and use that FACTUAL information as the basis for your domain name investing.  If you become a pro you can diverge from this path once you gain that ever alluding “feel” of domain investing that transcends common sense and lets you profit where others fail, but until then stick to the facts.  Stop listening to people on their soapbox.  Believe it or not, quite a few of them have their own agendas.  If they invest in a new extension (like .xxx) and all of a sudden they are telling everyone that buying into this extension  is a smart move should you follow them?  Are they trying to honestly help you, or are they trying to help their own holdings?  I’d vote the latter.  Stop trying to run a race using someone else’s methods because you are not them.  Remember, facts trump opinions so stick to’em when your investing in domain names and you will exponentially increase your potential rate for success.