Domain Name Investing 101: Online Real Estate as an Asset Class

The journey to financial independence
Domain name investing could provide future wealth

The following is a guest post from my friend Joel who has been investing in domain names for years!

Chances are that when you read the term “domain name investing” you immediately have the following questions pop up:

  1. Umm [insert embarrassed pause here], what exactly is a domain name anyway? Do you mean like a website? (No)
  2. What in the world is domain name investing and why should I care?
  3. How would I go about investing in domain names in the first place?

My goals for this article are to show you that: A) Domain names have inherent value B) Domain names can potentially be a great asset class to invest in and C) Give you some practical guidance on how the domain name investing process works.

Domain Name Definition

According to Wikipedia: “A domain name is an identification label that defines a realm of administrative autonomy, authority, or control in the Internet, based on the Domain Name System (DNS).”

According to my recent FAQ “What is a domain name?”: “A domain name is used to make it easy for people to find web pages on the Internet. The Domain Name System converts domain names (such as Google.com or MSN.com or our domain name of DomainSuperstar.com) into IP Addresses (numbers in the format of 11.222.33.44 or something similar) so that when someone wants to visit a particular web site they do not have to remember a long string of numbers but rather just type in an easy to remember name.”

Practically speaking, FinancialSamurai.com is the domain name for this website. You can't just go out and buy FinancialSmaurai.com yourself because that domain name is already taken. Sam could always sell it to you, but you'd have to pay a pretty penny for it and convince him why first.

Anyway, it is important to make the distinction between the words, code, files, databases, images, etc. that make up the Financial Samurai website and the location/address of the Financial Samurai website which is the domain name FinancialSamurai.com.

One can own a domain name without having a website but if one has a website and the website is online for the world to see then the website owner must have a domain name (or use the domain name of a 3rd party – for example, some bloggers have blogs on the wordpress.com or blogspot.com domain name that end up as a subdomain that look something like joelscoolblog.wordpress.com or joelscoolblog.blogspot.com).

Why Invest in Domain Names?

Just like Financial Samurai very astutely preaches the benefits of crafting a comprehensive strategy for your investments it is also important to sometimes consider alternative asset classes outside of the typical stocks and bonds.

Here are some reasons why I own approximately 1,000 domain names and why they very well might be an asset class that you should consider paying attention to as a component of your diversified investment portfolio:

1) Uniqueness – Every single domain name is unique and therefore has inherent value. For example, there is only one and can only ever be one FinancialSamurai.com, Cars.com, Hotels.com, etc. Since each domain name is unique then there is great opportunity for value creation because unlike the tulip bubble of the 17th century where tulip prices deviated wildly in excess of the actual quite equally low inherent value of the tulip bulbs themselves each domain name has vastly different intrinsic values. I could go into great detail on this but I think that we could all agree (Financial Samurai included) that the domain names Cars.com and Hotels.com have a much much much greater intrinsic value than the domain name FinancialSamurai.com or CreditCardChaser.com).

2) Cost – Registering a domain name is cheap – very cheap. The cost of domain name registration is around $7 to $10 annually. Of course, buying a domain name from a 3rd party could cost any amount of money that you and the other party agree on but the actual ongoing required annual registration fees are very small. (Tip: The term “hand registering” refers to finding a domain name that no one else is currently paying the registration fees for and grabbing that domain name for yourself by paying the registration fees to a domain name registrar like Bluehost, although the term “buying domain names” can be used to describe the hand registration process OR the process of buying a domain name from a 3rd party either through a private seller or through a domain name auction – typically buying a domain name from a 3rd party is handled either through an escrow service like Escrow.com or directly though the domain name auction aftermarket and its as simple as making payment and then transferring the domain name from the sellers account at their registrar to your your account at your registrar).

3) Internet – The Internet is a large and growing market. If you think of domain names as the online real estate of the Internet then as the Internet continues to grow in popularity and become more and more a part of our daily lives then domain names as the online real estate of the Internet will continue to increase in value as well.

4) Utility – Just like certain asset classes like orange juice futures or soy beans or pork bellies all are real asset classes with real tangible utility I believe that domain names have real tangible utility as well. While you can drink orange juice and eat soy beans and eat pork bellies, you cannot eat or drink domain names but there are different outside factors that influence what we can do with domain names. What is really cool is that a significant portion of Internet users will type a name directly into their URL bar without even knowing what the site is or if it even exists because the perception is that if one wants information on “hotels” then what better domain to go visit then hotels.com or if one wants information on “cars” then then cars.com etc.

One example of a domain name from my domain name portfolio that gets type in traffic is the generic keyword domain CaliforniaCarInsurance.com so when people are looking for information on finding “California car insurance” then a significant number of web users will simply type in the URL CaliforniaCarInsurance.com – whether they have ever been to the site before or not) as does the aforementioned uniqueness as does keywords in the domain name and ease of branding (you definitely remembered the “Financial Samurai” brand a little easier than “John Smith's Finance Blog” that you read last week right? Here are 25 points for helping you choose a good domain name.

5) Strategies – There are many strategies for creating wealth with a domain name. You can A) Buy a domain name for X price and hope to flip it for X+ price (either a short term flip or a long term flip – think “daytrading” vs. “buy and hold” as the stock investment analogy or B) Buy a domain name and develop it by building a website on it that will make you money (my personal favorite strategy) C) Buy a domain name and just “park” the domain name so that it just shows advertisements on the domain name that make you money when people type in your domain name (again this illustrates the value of type in traffic) and click on your ads or any other number of domain name investing strategies.

Related: How Much Can You Make Blogging? A Lot More Than You Think!

How to Invest in Domain Names

Learning how to make money as a domainer (a domainer is someone who buys and sells domain names or invests in domain names and monetizes domain names) is not something that can be covered comprehensively in a paragraph or two let alone an article or two but a few quick things to keep in mind is that you should stick with niches that you know and that you should really do your homework before making any big purchases.

If you have specialized knowledge about football or knitting or IRA's then you like have an advantage over others without your specialized knowledge when it comes to spotting valuable domain names in that niche.

Sure, it only costs $7 – $10 to hand register a domain name but before you ever decide to make any kind of sizable monetary investment into a domain name then you should do your homework by first reading things like the 25 rules for choosing a good domain name so that you can understand some of the criteria for evaluating what makes a domain name valuable and even more importantly learn some of the mistakes to avoid (such as registering domain names with trademarked terms in them – a big no no).

Domain name investing is not for everyone but if I can tell you from personal experience that investing in domain names is a potentially very profitable and rewarding experience and if you have somewhat of a nerdy streak like me then it can also be quite a bit of fun!

What questions do you have about domain name investing?

BONUS #1: 10 of the Most Expensive Domain Names Ever Sold (I could be missing a few)

  1. Sex.com $14,000,000
  2. Fund.com $9,999,950
  3. Porn.com $9,500,000
  4. Business.com $7,500,000
  5. Diamonds.com $7,500,000
  6. Beer.com $7,000,000
  7. AsSeenOnTV.com $5,100,000
  8. Korea.com $5,000,000
  9. Casino.com $5,500,000
  10. Toys.com $5,100,000

Thanks! – Joel

Passive Income X Factor – Starting A Website That Makes Money

It's been around six years since I started Financial Samurai and I'm actually earning a good passive income stream online. The top 1% of all posts on Financial Samurai generates 31% of all traffic. The average age of the top 1% posts is 2.3 years old. In other words, after putting in the hours to write some very meaty content over two years ago, 10 posts consistently generate a monthly recurring income stream that's completely passive.

I never thought I'd be able to quit my job in 2012 just three years after starting Financial Samurai. But by starting one financial crisis day in 2009, Financial Samurai actually makes more than my entire passive income total that took 15 years to build.

If you enjoy writing, connecting with people online, and enjoying more freedom, see how you can set up a WordPress blog in 30 minutes like mine. Starting an internet business is one of the best things you can do since it's so easy and inexpensive to start!

Pro Blogging Income Statement
You can start your site for next to nothing and potentially make a lot of extra income. This is a real example.

Updated for 2021 and beyond. Related: Buying And Selling Blogs As A Business

64 thoughts on “Domain Name Investing 101: Online Real Estate as an Asset Class”

  1. Pingback: Strengthen Your Brand By Registering Your Name Online | Financial Samurai

  2. Samurai,

    I should also note about domain appraisals. People love to see numbers on a screen which reflect property value. This third party recognition can lead to a good feeling about your investment however the domain asset category is probably the worst industry to rely on automated appraisals for value.

    Let’s use the real estate comparison. If your house is worth $500,000 then odds are any licensed appraiser will valuate your home much the same – plus or minus 10%.

    However with domains … oh my….

    Take for example. A highly valuable domain no doubt however using some of the most popular automated “domain appraisal” systems around one can quickly get confused about a solid value range.

    Epik estimates the domain at $2,189,500
    https://appraise.epik.com/lasvegashotels.com

    Estibot.com estimates the domain at $755,000

    Now take the domain

    Epik estimates the domain at $48,000
    Estibot.com estimates the domain at $16,000

    ————————————–
    These are significant differences!!
    ————————————–

    No automated system can ever factor in the value of branding, how much the traffic is worth and many other elements to a common buyer since (outside of a pure domain investor) these dollar values change significantly. A hotel lead may be worth $5 to me but $100 to a hotel company. How can an automated appraisal factor in all of these unknown variables? It’s impossible (or at least not available currently) so any automated domain name appraisal is essentially fools gold.

    The lesson here is never believe a value on a screen. What is important however is the data you an extract from these appraisals outside of the pretty lottery ticket value. Important items are exact search, existing traffic, any existing pagerank, industry of the name (obviously financial related terms are worth more than classified ads) and more.

    A lot of people think domain asset investing is easy and sure – its easy to find one name and make a quick buck but to properly apply finances for a portfolio of domain name assets takes a lot of knowledge. The good news is that many of today’s success stories are people who started in the business less than three years ago so when you hear the words all good domains are gone this may be right – but it doesn’t mean there are not a lot of good domains still very affordable.

    Domain name investing is truly an acquired skill but one based on knowledge more than luck.

  3. Samurai,

    Sorry – I can see how that was a little confusing. In your case what I meant is once someone has a developed site with traffic then they really have to view any potential sale as much more than just a domain asset sale. Treat it as a real business I guess is what I mean.

    A lot of buyers will offer people with a semi-popular blog 20 or $30,000 and people will sell but its a calculated value based on tearing down the site many times just to show ads.

    Once you get a popular site up and running you need to shop and sell to people who have the same development interest (only much more resources)

    As for your question.

    No, someone is probably not going to buy your content without your domain .. however they will buy your domain without your content – when you get somebody to buy both then you have a winner.

  4. Samurai,

    It’s hard to put a value on top domains.

    Howtoloseweightfast.com is worth anywhere between 20-100k in my book. It really depends on the buyer and this is the hardest part about domain valuation since unlike real estate you have a world of different buyers. From people who just flip domains to end users. Even the definition of an end user is debated long and hard.

    Is it just a company who specializes in the keywords of domain (i.e. weight loss company)?
    Is an end user a blogger like yourself who will use the name?
    Is an end user somebody who will create a 5 or 10 page site and throw some Adsense ads up?

    Typical “domainers” = people who purely buy and sell domains (you know those with the annoying ads) usually only define the elusive end user as a big corporation however its not the case. If I owned financialsamurai.com and sold it you and you created this blog you are an end user however quite likely an individual would only pay less than $5,000 for a name whereas a big company may pay $500k for the same name. Truly wide variance and that’s why valuations are tough.

    What any investor needs to pay particular attention to is the LIQUID Value of a domain name – otherwise it can be somewhat of a speculative game. Remember, the key word is LIQUID value. This is the single most important thing in domain investing as we are in a very ILLUQUID marketplace.

    Unless you have the contacts, understand where to sell names and what brokers to call for assistance its very hard to dump that $10,000 name on any given day. If you own stocks you simply put a sell order in and move on. Sure, you might lose a few bucks but nowhere near the amount you would lose if you didn’t know anyone and needed to trade in a $10,000 domain for cash today.

    I’ve seen $10,000 names go for $500 only because the buyer needed the money and could not wait a few weeks to sell.

    If you have the budget buy some good names and wait however your portfolio risk should always be assessed with liquid value. People who provide the most liquid value are other domain investors so as you build a portfolio you need to make sure the prices paid are equivalent to what you would expect another domain investor to consider a rock solid deal. This will provide some security in the event of a firesale.

    Of course, these numbers are hard to determine but any good domain under a couple thousand is a pretty safe bet. Again, the investor needs to understand what constitutes a good domain and this takes a lot more education than I could say in this post.

    In no other market do you have such a negative factor of liquidity going against you so yes, there is a LOT of money in this industry but you have to have patience and consider each buy a long term buy while building a portfolio with attention to firesale values..

    Your domain financialsamurai.com at face value is not worth much more than a couple hundred backs but because of what you have built its quite likely worth a small mint. This is the beauty of the internet – in fact, you are one of the true success stories on the web – never sell your domain, sell your site. You have the platform and ability to monetize this where I hope to see another bankaholic story one day.

    1. I agree that liquidity is what it’s all about. If everybody starts writing about domain name investing, money will flow through to the system, and prices will get bid up.

      GoDaddy and all those sites should do more to promote this market place if they’d like to boost profits.

      Tell me more aboutyour statement “never sell your domain, sell your site”? Can one accept buying my “site” without buying the url: financialsamurai.com?

  5. Wow,

    As someone heavily involved in the domain name sales arena I have to congratulate both Joel and the Samurai here for such a great thread. Believe it or not this post has mor comments than 99% of all posts in the actual domaining world.

    Investing in domains is actually a huge business but collectively sees only a small growth from people outside of the sector every year. When I say small growth I mean people who really dive into this business and purely buy and sell domains. Lots of people buy domains with an intent to use them but as purely just an investment the amount of “new blood” in this industry is probably at a 5% growth rate.

    Every Tuesday weekly sales are reported by DNJournal which almost exceed well over $1,000,000 per week – and these are just reported sales. I know people who do over $500,000 a month in sales and never report a single one so the piece of the pie getting reported is far less than what actually sells.

    I will add that there are a few classes of domain names.

    One are the keyword domains Joel mentioned which have tremendous development value however the key is to understand what makes a good keyword set and this is where the opportunity lies to get great deals. Many traditional domain owners actually don’t understand the development world at all and many times price names that sound cool higher than ones which have a lot more productive value in terms of SEO and online commerce potential.

    How many of you think http://www.howtoloseweightfast.com is a great domain name?

    Some would say great – others would say too long – while even more would probably not like it because its more of a question than a brandable name.

    However the fact is according to Google the keyword set “how to lose weight fast” is the second highest search term for anything to do with weight loss.

    Many domain sellers price shorter names less than longer however sometimes the value is in the longer tail terms as well

    Secondly – we have 3 letter names – like AUD.com – These names are more collector names than anything else however investors should watch for trends as often its pretty easy to grab one for 3 or 4k and sell it for 10 only a week later. Most of the aftermarket buyers (on venues like SnapNames and NameJet) are still domain investors and everyone (well almost everyone) has a budget so lots of opportunities lie. Of course, if you intend to show ads on the name based on products which a company who has the same acronym trademarked you very likely will be sued so unlike buying a car one has to really understand trademark law when purchasing these types of names. You also have to use common sense. Are you buying a domain because its close to a cool company you like? .. If the answer is yes, then you buying this domain with the intent to capitalize on someone else’s trademark. Of course, someone has to prove this but heavy fines exist

    Then we have brandables – catchy names like nostringsattached.com or http://www.govote.com – names that have meaning and could very well be used as part of a branding campaign. At the end of the day these usually catch more but the supply of interested buyers is far less than development worth, keyword rich domains.

    I published an article here that sums up the state of domain market today vs. 10 years ago and may be of some value

    https://www.luxurynames.com/domain-valuation.html

    This asset class is one of the greatest finds out there but be careful. People who spend money recklessly and just buy names because they sound cool often end up with nothing less than a pile of renewal fees.

    Those who take some time to educate themselves and ask people for value opinions …. people who sell domains – not people who like domains … can do very well.

    1. Awesome insights Alan! Love your thoughts on short and long names, searcheable titles, and brand names.

      How much do you think http://www.howtoloseweightfast.com would sell for?

      I guess I’ve got several domain names myself and the two that are public are FinancialSamurai.com and Yakezie.com, which I guess would go in the brand name category.

      I just bought a couple names last night and will play around with them for a friend’s business.

      Thnx for stopping by!

  6. Credit Card Chaser

    @LeanLifeCoach

    One of the best ways to get a lot of attention on your domains is to place them for sale on places like GoDaddy’s Auction platform, Afternic, or Sedo. Of course you will have to pay different commissions or fees but you will get your names in front of a lot of people looking to buy domain names.

    If you want to avoid paying any fees or commissions then you can contact potential buyers on your own but that can be pretty time intensive.

    I have never personally leased out a domain although I technically am leasing ~ 30 domains names myself in a lease to buy financing arrangement that I set up for some premium domains through a domain name financing company.
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  7. @Joel

    While poking around the net over the last several months I have picked up a dozen or so domains. For those that don’t have the time to build a bunch of websites, do you have any suggestions on the best way to market a list of domain names?

    Also, have you ever explored the idea of domain leasing?
    .-= LeanLifeCoach´s last blog ..Stop Fighting Fires – Prevent Them Instead! =-.

  8. kosmo @ The Casual Observer

    @The Genius
    I think they just threw Adsense for Domains on the site, so there would have been minimal hustling. I simply overlooked the dual possibilities of the name because I was locked into it being the name of the band.

    Oh, well. I had a lot of fun running the site, and that was reward enough.
    .-= kosmo @ The Casual Observer´s last blog ..When Seconds Count, The Police are Just Minutes Away =-.

  9. Credit Card Chaser

    @admin

    There is also a lot of money to be made in selling vitamins, diapers, and viagra. Just because there is a lot of money to be made in anyone area that does not mean that it has to be made at someone else’s “expense”. At least not if one truly believes in the capitalistic theory that both parties gain by the exchange. Certainly there are companies in any industry who do things unfair to consumers and hopefully that is something that we can both point out from our respective blogs when we see it! – Joel

    PS You know I was just dying to work in the word “viagra” somehow and trip your spam filters even more :)
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  10. Credit Card Chaser

    Also, just thought it was cool to mention that my “Bonus #2” Top 10 list of 09 is already obsolete:
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  11. Credit Card Chaser

    @admin

    No, I just meant that the keyword phrase “credit card” would be a common enough phrase on any personal finance oriented blog. :)
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

    1. Joel – Gotcha. It makes you wonder though, if the spammers etc are really targeting credit card users, that must mean there is a ton of money to be made in the space, but at whose expense?

  12. Credit Card Chaser

    admin :
    Kevin – A Domain Name ETF would be a great idea! Too bad, there’s no “earnings” or cash flow really. Hence, what would likely happen is a Venture Capitalist can create a Domain Name fund with a 3-5 year lock up for incubation. Sam-urai

    One of the closest things you have to that approach is Marchex (ticker: MCHX) as they hold tons of domains as part of their primary business strategy: https://www.marchex.com/ That being said I am not even sure that I necessarily would invest in them because just because a company makes holding a lot of premium domains a large part of their strategy does not necessarily mean that the company has the right strategy in monetizing the domains or that the company is well run, etc. Buying MCHX certainly wouldn’t be a pure domain play but it would be an easy hands off strong domain play (just subject to certain company risks that you wouldn’t be subject to if you just bought purely a portfolio of domains).
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  13. Credit Card Chaser

    @admin

    Dang it – you caught me! J/K I bet that it might have something to do with the large post size and the many different keywords that where used that are usually targets from spammers using automated programs that look for words like “investing”, “insurance”, “credit cards” (which you talk about all the time) but also the words “domain names” “penny stocks” “make money online” (things which aren’t mentioned much on this blog) so the combination of all of these different keywords probably just had this post pop up in a bunch of new spammers searches. At least that is my guess as I am not 100% sure.

    1. Joel – I C. Do I really talk about credit cards all the time? I don’t think I’ve pimped a single credit card or anything before, but maybe I have a fuzzy brain. The only thing I believe in credit cards is to use it to your advantage, and not to their advantage. FS

  14. Kevin@OutOfYourRut

    How long does anyone think it will be before there’s a Domain Name Mutual Fund?

    Any of you entrepreneurial types have any ideas on this?
    .-= Kevin@OutOfYourRut´s last blog ..Finding Work by Working for Free =-.

    1. Kevin – A Domain Name ETF would be a great idea! Too bad, there’s no “earnings” or cash flow really. Hence, what would likely happen is a Venture Capitalist can create a Domain Name fund with a 3-5 year lock up for incubation. Sam-urai

  15. Joel – Yeah, ur tripping those filters left and right making me work over time in the “approve” section of WP!

    I like the Gen Italia! Genius! Getahoe is always hilarious! Ill be going up there often this season. Gonna dump snow for 7 days next week!

  16. Millionaire Acts

    There are a lot of internet entrepreneurs nowadays who are into domaining – either buying and selling domains or domain flipping (buy a domain, develop it, then sell it for profit).

    In my case, I am engaged more in online activities that puts cash to my pocket. Internet is definitely one of the best business to have.

    Why? You can carry your business almost anywhere in the world (as long as there is an internet connection). You won’t be having a lot of expenses (I would say, domain and hosting services only).

    You can refer to my previous post when I described why internet is a profitable business nowadays.

    https://www.millionaireacts.com/926/why-internet-business-is-profitable.html
    .-= Millionaire Acts´s last blog ..Where are you in the ESBI Quadrant? =-.

  17. Kevin@OutOfYourRut

    @Credit Card Chaser
    I was of course being a bit absurd with dog.com and tree.com, but the basic point is to keep it as simple as possible with domain selection. The more simple it is, the more likely someone will want it. There’s close to zero chance anyone would want to buy my domain name since it’s too specific.

    But good points by all in response.
    .-= Kevin@OutOfYourRut´s last blog ..Finding Work by Working for Free =-.

  18. Credit Card Chaser

    @admin

    I actually am not really sure about how long those domains were held before being sold but if someone else knows (or wants to do some digging in the Internet Archives/Wayback Machine/Historical WhoIs records) then that would be an interesting thing to know.

    As far as I know each of the sales were pure domain name sales so no content and no users at all or at least very very minimal (otherwise they would be classified as a website/domain name sale).

    One recent sale of a domain name/website combo was Insure.com that sold for $16 million. This was an example of a website sale that just happened to have a great domain name though rather than a domain name sale because the Insure.com website was already ranking very highly in the search engines with thousands of pages and links already existing and making money hand over fist before the sale. Many people did not quite grasp the difference though which you can read about here:
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  19. kosmo @ The Casual Observer

    @Charlie
    That’s because the period is a delimiter for the domain. If you try to register
    my.name.com

    this is going to fail, because the name separates into a “base domain” of name.com and a subdomain of “my”.

    You CAN, however, register name.com, then set up “my” as a subdomain under name.com and put a web site under “my”. When people type my.name.com into the browser, they would see that website. If you Google “how do I set up a subdomain”, I’m sure you’ll find a ton of information on the subject,

    Numbers should work just fine. I’m not sure which (if any) forms of punctuation are allowed.

  20. kosmo @ The Casual Observer

    I had a domain back in the late 90s/early 00s related to a music group that I used to follow (actually, I still follow them, but they are retired). The group eventually got their own site up and in good shape (very popular group, just didn’t have a big site very early) and I let the domain lapse because the site became a bit redundant.

    Years later, I see that someone has the domain and has all kinds of ads for tickets to football games … because the band has the same name as a football team. Kind of kicking myself for missing the boat on that one. Erg.

    (Yep, I’m being intentionally vague to avoid driving traffic to the site :)
    .-= kosmo @ The Casual Observer´s last blog ..In Defense Of Scott Boras =-.

  21. I really like this topic! Thanks for all the info. I recently bought my name as a .com and decided to hold off at the time for my name with a dash in it as right now I have no need to build a website with my name as the domain.

    My question for you is – what are the rules on using numbers, symbols, and punctuation in a domain? I tried registering for my name with a period in it, but godaddy didn’t like that. What else does/doesn’t work?

  22. Hey Joel – in your bonus #2 section, do you have an idea how long these domains were owned before sold? Also, how many of them had regular users and content beforehand as well?

    Monevator – You could have owned Money.com, but didn’t? We can no longer be web friends, as I’m too sad!

  23. Credit Card Chaser

    @Monevator

    Sorry for bringing up the touchy subject :) Here is my feedback on your 3 points:

    1) Domain formats are proliferating but .com is still king followed by .org/.net and the more weird/junk extensions that come out just serves to increase the value of the .com. It is commonly understand by all .com owners that they love it when people develop the exact same domain but in an alternate extension because the alternate extension will bleed off so much repeat traffic to the .com since .com is so ingrained in peoples minds (i.e. if I owned Tampa.com – I don’t btw then I would love it if the owner of Tampa.net developed the domain into a huge website because then Tampa.com would get more traffic from people visiting Tampa.net and then attempting to return later on and typing in Tampa.com instead because .com is the default king authority in most peoples minds).

    2) Very true although one thing I neglected to mention is that owning an exact match keyword .com domain name will help to rank a site higher in the search engines everything else being equal (i.e. cars.com is the absolute best domain name to have when trying to rank for “cars” in Google) and justifiably so because if someone types in “hotels” into Google then chances are that hotels.com will be extremely relevant to their search query. What I love about this benefit is that it is impossible to duplicate (i.e. if you owned PersonalFinance.com then you would have a huge advantage over even the websites with the deepest pocketed competitors of yours when trying to rank for “personal finance” – unless they try and buy the site from you :) )

    3) Very true but even so type in traffic on premium keyword domains can still be substantial because people will type keyword + .com into their URL.

    Nothing wrong with using a really good brandable made up name if you market it right which you have done – nice work!
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  24. Credit Card Chaser

    The Genius :

    Credit Card Chaser :@The Genius
    As I mentioned earlier I do not buy speculative brandable type domain names but generic keyword domain names that I develop into money making websites although good luck with selling that domain to someone! Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest

    Oh, ok. Just seems like it takes way too much effort trying to develop a site for cashflow.
    The Genius´s last blog ..Internships in Francophone Europe

    It is certainly a lot of work to develop a site that generates any kind of real cash flow unless you pay out the wazoo for an ultra premium domain name (i.e. if you have the money to buy a candy.com then almost no matter what you do you will get a significant amount of traffic just from type ins). One of the reasons that I love developing sites though is that since it takes a good bit of know how and a lot of hard work it will be a pretty sizable barrier to entry for most – just the way I want it :)
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  25. Don@MoneyReasons

    @admin
    Yeah, I didn’t mean derivations of your financialsamurai.com domain name. I was thinking about a person’s name, like http://www.chevychase.com. or http://www.bradpitt.com.

    I do know that there exists derivation of popular sites, for example, there is johncow.com and goggle.com (surprisingly gooogle.com redirects to google.com). And these almost domains get hits from mistyped popular domain names. I bet the johncow.com actually get a good amount of traffic…

    @Ron, Yeah I didn’t think of getting a domain name as a gift, but the more I think about it, the better that sounds!
    .-= Don@MoneyReasons´s last blog ..My Christmas Tradition =-.

  26. Credit Card Chaser :@The Genius
    As I mentioned earlier I do not buy speculative brandable type domain names but generic keyword domain names that I develop into money making websites although good luck with selling that domain to someone! Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest

    Oh, ok. Just seems like it takes way too much effort trying to develop a site for cashflow.
    .-= The Genius´s last blog ..Internships in Francophone Europe =-.

  27. Credit Card Chaser

    @admin

    Yes, all of the fully developed sites have content although some are of course in various stages of development and not finished yet.
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  28. Credit Card Chaser

    @admin

    All of the content is high quality as it it has to go through multiple editors before being published.

    I think when you say “activity” you are coming from the blog owner point of reference where a blog will look dead if it doesn’t have a lot of comments – all/most of my websites are “regular” websites that are more of the stand alone informational type websites rather than super involved community type websites (although I do have a few active community type websites).

    The value proposition of DomainSuperstar.com in a nutshell is that the site makes it easy for anyone to consistently find great domain names with money making potential.
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  29. Hi @admin,

    While it is true that all of the names that @Kevin@OutOfYourRut referred to are already registered, there are domain aftermarket websites that specialize in auctioning expired names such as these (or similar).

    These names can be bought at sites such as: SnapNames.com, NameJet.com and others…and since most of these expiring names have a little age in most cases, there might be a little traffic still coming to the name and the name is a generic keyword name, which is what people type into Google when doing a search – so there really isn’t a reason to go out and register a “brandable” name (such as Mashable, Woot, etc) if you are looking for something more generic (the best part is this: most of the auctions generally start at only $59…and if you wanted to just purchase the name without being involved in an auction, there are plenty of fixed price listings for good quality domains).

    Great post!

  30. Credit Card Chaser

    @admin

    admin :
    @Kevin@OutOfYourRut The problem is, all those domain names you talk about have already been registered! Hence, why we need to come up with new names such as what Mashable, Woot, etc have done.
    admin´s last blog ..Tuition Hike For The Poor Is Like A Tax Hike For The Rich

    Or, if you anticipate that the domain will continue to increase in value and you have the funds you can buy one of those domains from their current owner.
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  31. Credit Card Chaser

    @The Genius

    As I mentioned earlier I do not buy speculative brandable type domain names but generic keyword domain names that I develop into money making websites although good luck with selling that domain to someone! :)
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  32. @Credit Card Chaser Great info Joel! Thanks for being so responsive and thorough. Love it!

    Thanks for reminding me to differentiate between the domain name and the website. Clearly, my website is not that complicated, so the value is as you said, more in the Financial Samurai brand, community, reach etc.

    I didn’t realize you can, or you do use a professional writing service to fill up your 1,000 domains with content! That’s very interesting? I like your “buying fixer uppers” strategy analogy. How do you control for quality control though? Or, is the main purpose to fill each site up with as much content as possible, to create the illusion of activity? Just an honest question here as I’ve seen many sites with stuff, and I go whuh? ;)

    There is a lot of info here, that a truly involved reader such as myself will take a long time to digest. Hence, if you were to summarize in one sentence, what the value proposition is of domainsuperstar.com, what would it be?

    Sam-urai
    .-= admin´s last blog ..Tuition Hike For The Poor Is Like A Tax Hike For The Rich =-.

  33. Kevin@OutOfYourRut

    It looks as if the key is to take the most basic name and register it. Toys.com, Business.com selling for millions? We should register dog.com, tree.com, etc, and just wait.

    This isn’t at all unlike buying penny stocks. Most will end up in liquidation, but if you can come up with only one or two that hit, it could be big.

    Excellent post!
    .-= Kevin@OutOfYourRut´s last blog ..Ten Common Sense Ways to Reduce Our Identity Footprint =-.

  34. Credit Card Chaser

    @admin

    @admin

    Yea! :)

    1) That is a good question and I would have to defer to let a domainer that has a strategy of selling domains answer (I posted a link to this post on my DomainSuperstar.com so maybe we can get a few other domain name investors that actively look to sell their domains jump in and answer this question) since my strategy is to buy domains and develop them in fully functioning money making websites so that they generate cash flow for me.

    2) I register domains at GoDaddy and at Moniker which makes the carrying cost a little over $7 a domain. When I develop a domain I use a lot of tools to make the development process easy to scale across many different domains (and I also use a professional writing service to help me with writing high quality content for the sites). My breakeven for most of my domains happens pretty quickly in most cases although even if the breakeven takes a while to occur keep in mind that the underlying asset (the domain name) should theoretically be increasing in value as well so lets say you buy a domain name for $10,000 and just because it is a strong keyword domain name and it get a certain amount of natural type in traffic to the domain before you even start to do any marketing that causes it to make $100/month then at the end of year one your outlay for the domain was $10,000 but you also had a 12% return because of the $1,200 it kicked off in cash flow over the course of the year (and if you chose the right domain then you most likely have an appreciating asset as well so you can sell the domain for more than $10,000 down the road if you so choose).

    3) Determining the value of a brand is very tricky and there is more of an art to it than a science for sure. Different people have different ideas on how they think the best way is to do this. Ultimately, it all comes down to really what someone else will pay since with a brandable domain name there is not as much intrinsic value as a keyword domain with type in traffic and real existing revenue numbers to base a valuation on. The example you mentioned is used by some people but I believe is used in error in most cases. Just becuse ireport.com was sold for $750k does NOT mean that ireading.com or imoney.com or illollypops.com or anything else is necessarily worth that amount or anything even close to that amount although many people will attempt to make that case.

    4) I’m sure that GoDaddy makes a substantial amount of money but for me personally I don’t need any further proof of its profitability then checking all of my own stats :)

    5) You are right – I would say that the domain name FinancialSamurai.com definitely falls into the brandable domain category (as opposed to a keyword domain like PersonalFinance.com or FinancialPlanning with much higher intrinsic value) BUT since you have developed just a great brand with your website so far then you domain is now worth much more to not only you but also to other people that would love to take over your site.

    6) That is definitely a real concern. I think what you are really talking about here though is the sale of a website and not primarily the sale of a domain name (although of course the domain name would be included in the sale of the website) because it is important to distinguish between the two. With the sale of a pure domain name there is no website involved where with the sale of a website it involves primarily the sale of the website and the domain name accompanies the sale and is usually of secondary importance. For example, the value of FinancialSamurai.com would be primarily related to your awesome posts, your community involvement, the existing links built to your website, the traffic that you are receiving from search engines/referring sites/etc, and your RSS subscribers and NOT primarily from your domain name itself (although that plays a role because your site would be much less attractive to a buyer [and readers for that matter] if your domain was http://www.super-coolz-finanz-advicez-101.info instead of FinancialSamurai.com even with exactly the same website content).

    Whew that was long. Maybe longer than my post. :)
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  35. Credit Card Chaser

    @admin

    Yea! :)

    1) That is a good question and I would have to defer to let a domainer that has a strategy of selling domains answer (I posted a link to this post on my DomainSuperstar.com so maybe we can get a few other domain name investors that actively look to sell their domains jump in and answer this question) since my strategy is to buy domains and develop them in fully functioning money making websites so that they generate cash flow for me.

    2) I register domains at GoDaddy and at Moniker which makes the carrying cost a little over $7 a domain. When I develop a domain I use a lot of tools to make the development process easy to scale across many different domains (and I also use a professional writing service to help me with writing high quality content for the sites). My breakeven for most of my domains happens pretty quickly in most cases although even if the breakeven takes a while to occur keep in mind that the underlying asset (the domain name) should theoretically be increasing in value as well so lets say you buy a domain name for $10,000 and just because it is a strong keyword domain name and it get a certain amount of natural type in traffic to the domain before you even start to do any marketing that causes it to make $100/month then at the end of year one your outlay for the domain was $10,000 but you also had a 12% return because of the $1,200 it kicked off in cash flow over the course of the year (and if you chose the right domain then you most likely have an appreciating asset as well so you can sell the domain for more than $10,000 down the road if you so choose).

    3) Determining the value of a brand is very tricky and there is more of an art to it than a science for sure. Different people have different ideas on how they think the best way is to do this. Ultimately, it all comes down to really what someone else will pay since with a brandable domain name there is not as much intrinsic value as a keyword domain with type in traffic and real existing revenue numbers to base a valuation on. The example you mentioned is used by some people but I believe is used in error in most cases. Just becuse ireport.com was sold for $750k does NOT mean that ireading.com or imoney.com or illollypops.com or anything else is necessarily worth that amount or anything even close to that amount although many people will attempt to make that case.

    4) I’m sure that GoDaddy makes a substantial amount of money but for me personally I don’t need any further proof of its profitability then checking all of my own stats :)

    5) You are right – I would say that the domain name FinancialSamurai.com definitely falls into the brandable domain category (as opposed to a keyword domain like PersonalFinance.com or FinancialPlanning with much higher intrinsic value) BUT since you have developed just a great brand with your website so far then you domain is now worth much more to not only you but also to other people that would love to take over your site.

    6) That is definitely a real concern. I think what you are really talking about here though is the sale of a website and not primarily the sale of a domain name (although of course the domain name would be included in the sale of the website) because it is important to distinguish between the two. With the sale of a pure domain name there is no website involved where with the sale of a website it involves primarily the sale of the website and the domain name accompanies the sale and is usually of secondary importance. For example, the value of FinancialSamurai.com would be primarily related to your awesome posts, your community involvement, the existing links built to your website, the traffic that you are receiving from search engines/referring sites/etc, and your RSS subscribers and NOT primarily from your domain name itself (although that plays a role because your site would be much less attractive to a buyer [and readers for that matter] if your domain was http://www.super-coolz-finanz-advicez-101.info instead of FinancialSamurai.com even with exactly the same website content).

    Whew that was long. Maybe longer than my post. :)
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  36. @Credit Card Chaser
    Let’s get a little more technical now, as my beginning questions were just layupts. :)

    1) What is a good expected sell-through rate/yield? i.e. you have 1,000 domain names, what is a good percentage to sell every year as a goal?

    2) How do you address carrying cost? 1,000 domain names = $10,000/yr in registration fees until the domain name is sold. How do you calculate your break even costs?

    3) How do you determine the value of the brand? What are the metrics? Do we use comparables as a tool i.e. ireports.com sold for $750k, hence iReading.com should sell for $750K as well?

    4) Do you think the real money makers in all of this are simply the domain regisers such as Go Daddy?

    5) Someone offered me $10,000 for financialsamurai.com recently, and I turned it down. Why would I sell my domain name for $10,000 if I can earn $1-5,000/month and match the proceeds in 2-10 months for example?

    6) Why would people bother buying another blog’s domain name when successful bloggers want to retire? Isn’t the real asset the personality and writer of the blog, and readers/users will just jump to another domain name given the barriers to entry are so low?

    Thanks!
    .-= admin´s last blog ..Tuition Hike For The Poor Is Like A Tax Hike For The Rich =-.

  37. Don@Moneyreasons

    When I was a college student, my professor preached grabbing domain names while we could. Wish I had the money back then to do that.

    Interesting business. Domain names are definitely a scarce resource… You might be wise to register your name too, ex.) SamFinan.com. That way somebody won’t grab and use your name as their site. I’m seriously thinking about doing this exact thing for my kids.
    .-= Don@Moneyreasons´s last blog ..My Upromise Experience and was It Worth It? =-.

  38. Credit Card Chaser

    @admin

    “Seems like all one has to do is forecast new phrases, help push along the phrase, and sell to a cash rich entity no?”

    That’s what many people think but its far from easy (although some get lucky) because it takes talent to register names that actually will turn out to have value and you have to be willing to hold the names and pay renewal fees every year until someone actually ponies up the cash to buy them and many times you have to be proactive in trying to make the sale in the first place.
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  39. Credit Card Chaser

    @admin

    Generally speaking, yes. As long as the domain doesn’t have some sort of trademark issue to begin with then the big corporation will have to pony up and pay you the big bucks to buy the domain from you.

    That is actually a domaining strategy in and of itself that I don’t personally do but is quite nice because you can try to predict new trends or be creative and think up brandable domain names that you think someone may want some day (there are only so many combinations of words in the English language so back to my inherent value point and the limited supply increasing demand issue).

    One example of this kind of strategy is when Rick Schwartz (the self proclaimed “Domain King”) sold ireport.com to CNN for $750,000 a little while back. This domain has a lot of other qualities besides just being a brandable domain like being short, containing a keyword, etc.

    It is important to point out that Rick registered the domain name ireport.com years before CNN came up with their “ireport” trademark and branding so CNN was forced to buy it from him where the opposite and very bad strategy that some spammy type of domainers try to do is to register already trademarked terms which is definitely a very bad thing because you can easily have your domain taken away from you if the company that holds the trademark decides to go after you –

    i.e. going out and registering domains like “PepsiDrinks.com” or “GoogleMail.com” etc etc is definitely a very bad thing and called “cybersquatting” or “trademark squatting” – some people do this either because they are unethical or just misinformed and do not understand the risks – overall a bad strategy and it gives the majority of legitimate and honest domainers a bad name.
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  40. Joel – Let’s say I come up with a new phrase and domain name today, but some big corporate comes up with the same name 3 yrs from now and never heard of you.

    Do I own the right and trademark to the name, and the corporate has to pay me big bucks? Is it that black and white?

    Seems like all one has to do is forecast new phrases, help push along the phrase, and sell to a cash rich entity no?

  41. Credit Card Chaser

    @Evan

    Hi Evan, good question. Everyone has different strategies and my strategy is primarily to buy premium finance/insurance related domains on the aftermarket and then develop them into money making websites to generate cash flow for me rather than trying to flip them.

    Some of the domains I have hand registered and only paid the $7 registration fees but most of my premium domains I have purchased for anywhere from a couple hundred dollars up to about $35,000 each or so.

    To make a real estate investing analogy you can think of it like I am the person whose goal is to buy a bunch of properties (some in really good neighborhoods – premium real estate like in the middle of the city or on the beachfront) and then fix them up and rent them out for rental income vs. the strategy of the real estate investor whose goal is just to flip houses.

    Since I know what I am doing developing web properties and getting them to the point of generating a solid income then it has definitely been worth it for me. Others who maybe are not as web savvy would maybe be better off with the “buy and hold” strategy or the “make a quick flip” strategy.
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  42. Credit Card Chaser

    @Daniel

    If you wanted to take extra steps to protect your brand then you could consider buying the dashed version of your domain too but I don’t think its really that big of a deal because people can easily see the difference between Financial-Samurai.com and FinancialSamurai.com.

    Definitely people that bought domain names in 1995 were way ahead of the curve but I also firmly believe that for some of the reasons I outlined above that domain names will continue to increase in value over time AND more importantly I also believe (and put into practice almost every day by buying new domains) that there are many great domains still out there to both register anew or buy on the aftermarket for cheap.

    Many of our DomainSuperstar.com members find awesome money making domains names every day with our domain finding tools. Of course, its not something that is easy usually as it takes a lot of hard work and research but there are definitely some steals out there. There are a lot of different strategies out there from buying names with type in traffic ) to geo domain names ) to dictionary domain names ) to keyword domain names ) to dropped domain names ) etc etc etc (dropped domain names are domain names that have just recently lost their registration and become available for anyone to register again – i.e. the owner stopped paying the registration fees because they forgot about the domain, a company went out of business, the owner ran out of money, etc) – Sorry for all of the links I just wanted to illustrate practically speaking you can still find great domains even in 2009.
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  43. Credit Card Chaser

    @admin

    Yes, the escrow process is very easy at escrow.com (of course an escrow service is not required to buy or sell a domain name on the aftermarket but I would highly recommend it unless you are transferring a domain name from someone you know and trust – keep in mind that there is usually no need for an escrow service with many of the different domain name auction marketplaces because they just act as the intermediary to make sure the transaction goes through smoothly).

    The actual transfer process can be done almost instantly at many registrars (like GoDaddy) by doing what is called an “account push” where you just ask the registrar to move the domain from the sellers GoDaddy account (for example) to the buyers GoDaddy account. When you transfer a domain from one registrar to a different registrar then the transfer process usually will take anywhere from 5-7 days to complete. Both methods are very easy but just require certain security and authorization codes to be entered in for the registrar to initiate the transfer process.

    As for buying alternate TLD’s (extensions) of your name I think that it is generally a good idea if it is for your main brand although maybe not feasible if you have many domain names. For example, we own DomainSuperstar.com as our main flagship brand and so we also own DomainSuperstar.net/.org/.info/etc and just redirect them to DomainSuperstar.com (we also own DomainSuperstarS.com and redirect that as well as it is important to buy any common misspellings of your domain as well).
    .-= Credit Card Chaser´s last blog ..Win $500 in the 2009 Credit Card Chaser Love/Hate Credit Cards Contest =-.

  44. I can’t imagine it mattering too much. People can always put in a dash to make domain names similar enough and then spam from that without people noticing.

    If we were still in 1995, this would be a great idea, but now it seems almost impossible to think of a truly important domain name and capitalize on it. But the idea is solid. What do you think is the next technology we can apply this to?
    .-= Daniel´s last blog ..American Express Personal Savings Account =-.

  45. Hi Joel – To clarify, is it that simple for the “investor” to go through escrow.com to sell their domain to a 3rd party? Or can an exchange be made let’s say directly between me and you, and I just go to GoDaddy.com and tell them to transfer?

    Also, do you suggest buying all your domain names around you with the different endings (*.org *.net) etc like David suggests, or does it not really matter?
    .-= admin´s last blog ..Tuition Hike For The Poor Is Like A Tax Hike For The Rich =-.

  46. Great article to think outside of the box. Most people do not know this type of “investing” exists. Though most of the good domains have been taken.

  47. Great idea for a post. We should also be investing in our own domains and making sure we own the .com, .net, and also maybe the .org versions of our domain name. I’d read a long time ago this was a good idea to keep spammers from capitalizing on your domain name, I guess this would be akin to domain name identity theft. I’m just as guilty as everyone else, it’s something that’s been on my list ‘o stuff to do.

    – David
    .-= David´s last blog ..You gonna eat that? =-.

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