How Not To Start?

You’ll hear many success stories in the domain industry, but only a few are willing to show where they started. I started domain investing a couple of years ago, and I started in the worst way possible.

I bought one trademarked domain name and a lot of 64 domain names on eBay. I can still remember some of the domains that I bought. The domain names I owned at the time included:

• Riuven.co.uk – I still have no idea why I bought this
• Chipmunks2.com – I read that Fox were making a 2nd Alvin and the Chipmunks film. I thought I could cash in on this.
• IphoneWhite.co.uk – A trademark, which I should have avoided.
• BannerCommerce.net – Probably the best of a very bad bunch.
• Reviews2u.com – Another terrible domain
• Cheatcodezpro.com – Just no.

I had no prior knowledge of what made a good domain name. I had no prior knowledge of the Internet, really. As such, I made a lot of mistakes which cost a lot of money. I can’t remember the actual figure, and I don’t want to work it out as it’ll be too depressing, but I think it was in the thousands.

Needless to say, I never received a single offer on any domain name I owned at the time. I ended up dropping all of the domains that I’d bought, and learned a very valuable lesson.

Don’t rush in and buy domain names when you don’t know what you’re doing.I assumed that I would be able to sell any domain name for a profit. I did try to sell all of these names for ridiculous prices (would you pay $5,000 for any of these names?), but as you might have guessed, I sold none of them.

This is the perfect example of how not to start. There is a famous quote which says: “Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.” Be the wise man, learn from my mistakes.

This article should be a good starting place for you, but it shouldn’t be the end of your domain education. Reading blogs, articles and domain related websites every day is the only way to stay up to date with an industry which is moving quickly.

Aside from reading this article, you will also find great pieces of advice from websites such as DomainSherpa.com, DomainInvesting.com, TheDomains.com, DomainNameWire.com and DNJournal.com. Each of these websites offer something different, but each are extremely valuable resources. Learning to read daily about domain names is a step in the right direction and an excellent use of your time. Read, learn, repeat.

What type of domain name you could buy?

If you navigate to DNJournal.com, and take a look at their weekly sales chart, you’ll notice a large majority of the domain names which are sold every week are .COM domains. This should tell you that your best bet is to invest in .COM domains.

However, as I have shown you above, it’s not enough to simply register or buy some .COM domain names and hope that someone will buy them. Knowing what to invest in is the key. I’m going to list some of my recommendations for investments. These are only recommendations, and I can’t be held responsible for what you buy, and for how much you pay.

3 Letter .COM Domains

These are expensive domain names to buy, but are very liquid domains. Meaning that if you do need to cash in a domain name quickly, you’ll be able to fairly easily. There seems to be a large pool of domain investors looking to buy 3-Letter .com domains. These domains are also becoming increasingly popular with companies looking to stand out from the crowd, and regularly appear on DNJournal’s list of Top Domain Sales.

Typically, a 3 letter .COM will sell for around $7,000-$15,000 so it’s not something to invest in immediately, but something to keep in mind for the future. Of course, there are certain criteria which make certain 3-Letter .com domains more valuable than others. These criteria can be found at www.3character.com/priceguide.html.

Two Word .COM Domains

Two word .com domain names can sell very well. I love a good two word domain, for example: StayCool.com was a domain name that I bought from a user on DNForum. I later sold it to Jockey International Inc. Not all two word .com domains are created equally, however.

Descriptive keywords and phrases are often useful assets for companies, but you need to know how to pick the domain names, and how much to pay for them. There are excellent opportunities in this type of domain names, but you really have to pick your names well.

Professional domains work well too (I picked up LandscapeArchitect.com recently). Two Word .COM domain names can be picked up for a relatively small amount. I’ve sold many in the last few years – WellbeingCoach.com, TanningFranchise.com,BrownLumber.com to name but a few. Each was picked up for less than $100. It’s important to do research before buying any two word .com.

Look at whether there are many companies using those keywords or that phrase, and whether there are any advertisers for the keywords/phrase.

Another category which I think works well are what I like to call imperative domain names. Authoritative domain names using imperative grammar. The example above – StayCool.com is an imperative domain. Other examples would be CallNow.com and BuyThis.com.

Chinese Domain Names

This isn’t a market I’ve got into yet, but I’m looking to invest this year. China has produced more billionaires and millionaires than any country except for the USA, and many are turning their attention to domain name investments.

To a lot of people, investing in domain names for the Chinese market is a difficult thing. However, there are plenty of guides online about investing in Chinese domain names. The
website I’m using at the moment is ChineseLandrush.com. They have some interesting points.

Geographical Domains

This type of name is a firm favorite of mine. Some city + profession domain names are good investments. Real estate domain names (such as TorontoRealEstate.com) are often sought after, and can provide a good return on investment. A few things to check before buying one, though:

1. What is the population of the city? Domains for cities with a high population are always good.

2. Which profession is it? Is it a profession which spends a lot of money online? Real estate and dentistry are both professions that typically spend a lot of money on websites, SEO and online advertising.

You want to be aware of which niche you’re buying into. I’ve found that niches such as Real Estate and Dentistry can sell well. I haven’t had as much success with Doctor domain names, Electrician domain names or Florist domain names.

Another excellent aspect of a geographical domain is that you can easily create what’s called a lead generation site. A local lead generation site allows you to create a website and send the sales leads to a local company, who’ll then pay you an agreed amount of money to acquire the lead for their own purposes. I have done this with a couple of websites and have had good success.

Brandable Domains/Startup Domains

Brandable domain names are extremely popular at the moment. They are a fairly cheap to buy, and can be sold to new startups looking for a catchy domain name. Zynga, Google and Instagram were all catchy, brandable domains at one point.

Before you close this page and go to register thousands of brandable domains, I’d like to say that I’ve always found the brandable domain niche to be rather like a lottery. They are domain names that companies are not actively seeking. They’re not domain names that could improve a brand’s online presence, or help them with marketing campaigns.

There are, however, an increasing number of startups who are looking to domain marketplaces such as Brand Bucket to buy catchy startup domain names for a fairly small investment.

There are those who do very well out of this niche this DomainSherpa interviewee is one example: http://www.domainsherpa.com/mike-navarini-namerific-interview/.

Exact Match Domains

A sturdy niche, but declining in value thanks to Google. In the past, an exact match domain for a popular Google search meant that you essentially owned that niche. After many internal changes at Google, exact match domains are losing their power, and some consider them to be a thing of the past.

Many companies still see the value in exact match domains, and therefore may still buy them. They can also be a good form of lead generation in the right niche. I own a 3-word .COM domain name in a very competitive niche. Thanks largely to the exact match domain name I own, I have got the website into the top 5 search results on Google.

Keywords In General

Keyword domain names – nouns, verbs, places, activities, sports .COM keywords can all be solid investments, although as usual it’s best to do plenty of research before buying a domain like this. Check out the searches per month, Google results and CPC to start with.

These are my recommendations as to which domains you could buy when entering the domain name industry, but at the end of the day it is down you. Look at the various metrics:

• the TLD
• the age
• the number of competitors
• how many searches the domain receives per month
• the cost per click

Make sure you use all of this data along to make an informed decision before throwing your money away!

Know The Niche

Whatever you decide to buy, make sure you know the niche. That is extremely important.You should know whether there is a lot of online activity for that industry or not. If there is little online activity (no advertisers, company websites don’t get updated often, no Facebook, LinkedIn or Twitter activity), then this should be a red flag.

My advice would be to know the niche that you are investing in. Research any niche thoroughly to know whether the user base is active online and whether they spend money online.

What to avoid?

There are a two types of domain names that you should totally avoid when starting in the domaining industry. These are trademarks and typos, and both types of name can result in costly legal proceedings against you.

Trademarks

Stay away from any trademarked domain names completely. A trademark is a word or phrase which has been legally registered by a company. Trademarks are usually well policed, with many large firms employing their own trademark attorney. Their job is to find each and every trademark infringement, and taking action against those who infringe the trademarks.

Typos

Typos are common typographical errors or common misspellings of popular brands or companies. Typo-squatters buy this type of domain to try to profit from the traffic in some way. Typo domains of popular brands such as oogle.com usually receive over 10,000 visitors per day.

What Price Should I Buy For?

What is your budget? How much money do you have available to invest? How many domain names do you want to invest in? These are all questions you should consider when trying to gauge your domain name budget.

I’ve mentioned a sale of mine in which I bought a domain name for $69 and sold it for $10,000. However, don’t get hung up on the idea of buying $69 domains that no one else is bidding on. You may be able to flip these domain names every so often, but bidding on domain names in the $100+ range will generally give you a higher chance of selling your domains for four figures or over.